##### 



Exhibit 10.42 SUBLEASE THIS SUBLEASE(this Sublease) is dated for reference purposes as
of June 9, 2004, and is made by and between VA Software Corporation, a
Delaware corporation (Sublandlord), and At Road, Inc., a Delaware
corporation (Subtenant). Sublandlord and Subtenant hereby agree as
follows: 1. Recitals:This Sublease is made with reference to the fact that
Renco Investment Company, as
Landlord (Master Landlord) and Sublandlord, formerly known as VA
Linux Systems Corporation, as
Tenant, are parties to that certain Single Tenant Lease Form dated
as of April 6, 2000 and executed on May
2, 2000 (the Master Lease), with respect to those certain premises
consisting of approximately 139,311
square feet of leasable area as more particularly described therein
(the Master Premises), which is a
combination of buildings as follows: approximately 87,544 square
feet of leasable area located at 47071
Bayside Parkway, Fremont California (the 47071 Building) and
approximately 51,767 square feet of
leasable area located at 46939 Bayside Parkway, Fremont California
(the 46939 Building). A copy of the
Master Lease is attached hereto as Exhibit A. Capitalized terms used
and not defined herein shall have the
meaning ascribed to them in the Master Lease. 2. Subleased Premises:Subject to the terms and conditions of this
Sublease, Sublandlord hereby
subleases to Subtenant, and Subtenant hereby subleases from
Sublandlord, a portion of the Master Premises
consisting of the entire 47071 Building (approximately 87,544 square
feet of leasable area) (the Phase I
Subleased Premises) and a portion of the 46939 Building
(approximately 15,000 square feet of leasable
area) (the Phase II Subleased Premises), all as more particularly
described on Exhibit B (Phase I Subleased
Premises) and Exhibit B-1 (Phase II Subleased Premises) attached
hereto (the Phase I Subleased Premises
and the Phase II Subleased Premises are collectively referred to
herein as the Subleased Premises). 3. Term: A. Term.The term (the Term) of this Sublease shall commence on
February 1, 2005 and shall end on May 16, 2010 (the Expiration Date)
unless this Sublease is sooner terminated pursuant to its terms or the
Master Lease is sooner terminated pursuant to its terms. Notwithstanding
the above or anything to contrary contained in this Sublease, the Term
shall not be deemed to have commenced, and Subtenant shall not be
obligated to pay any Rent (as defined below) until (i) Master Landlords
Consent has been obtained in accordance with Paragraph 30 of this
Sublease and (ii) Sublandlord has delivered possession of the Subleased
Premises to Subtenant. Subtenant may, at its option, terminate this
Sublease by giving written notice to Landlord if, through no fault of
Subtenant (1) Sublandlord has not provided access to the Subleased
Premises to Subtenant on or before October 7, 2004 in accordance with
Paragraph 3(B) below, or (2) the Term has not commenced on or before
February 1, 2005. Subtenant shall exercise such termination right within
ten (10) days after the applicable date specified above. Upon the
termination of this Sublease in accordance with this Paragraph 3(A) or
Paragraph 30 below, the parties hereto shall have no further rights or
liabilities to each other, except for those provisions of this Sublease
which expressly survive termination. B. Early
Access.
Provided Subtenant has provided Sublandlord with the
insurance
certificates evidencing the insurance required under Paragraph 19 of this
Sublease, Subtenant shall be entitled to access and occupy the Subleased
Premises (i) commencing on October 7, 2004 for the sole purpose of constructing
the Subtenant Improvements (defined below); and (ii) commencing on January 7,
2005 for the purpose of conducting its business operations. Such early access
and occupancy shall be subject to all of the terms of the Sublease except the
obligation to pay Rent. Subtenant, however, shall be




---



##### 



responsible for paying for utilities pursuant to the second
paragraph of Paragraph 4.B during such early access and occupancy
period. C. No Option to Extend.Notwithstanding anything to the contrary
herein or in the Master Lease, Subtenant shall have no options or
rights to extend the Term of this Sublease or expand the Subleased
Premises. 4. Rent: A. Base Rent.Commencing on the February 1,
2005 and continuing each month throughout the Term of this
Sublease, Subtenant shall pay to Sublandlord as base rent
(Base Rent) for the Subleased premises monthly
installments as follows: Months into the
    
    Base Rent
    
    Due Date for MonthlySquare Feet
    
    Sublease term
    
    per Month
    
    Rental Payments102,554
    
    
    1
    
    
    $
    0.00
    
    
    February 1, 2005102,554
    
    
    2
    
    
    $
    0.00
    
    
    March 1, 2005102,554
    
    
    3
    
    
    $
    0.00
    
    
    April 1, 2005102,554
    
    
    4
    
    
    $
    0.00
    
    
    May 1, 2005102,554
    
    
    5
    
    
    $
    70,035
    
    
    June 1, 2005102,554
    
    
    6
    
    
    $
    70,035
    
    
    July 1, 2005102,554
    
    
    7
    
    
    $
    70,035
    
    
    August 1, 2005102,554
    
    
    8
    
    
    $
    70,035
    
    
    September 1, 2005102,554
    
    
    9
    
    
    $
    70,035
    
    
    October 1, 2005102,554
    
    
    10
    
    
    $
    70,035
    
    
    November 1, 2005102,554
    
    
    11
    
    
    $
    70,035
    
    
    December 1, 2005102,554
    
    
    12
    
    
    $
    84,599
    
    
    January 1, 2006102,554
    
    
    13
    
    
    $
    84,599
    
    
    February 1, 2006102,554
    
    
    14
    
    
    $
    84,599
    
    
    March 1, 2006102,554
    
    
    15
    
    
    $
    84,599
    
    
    April 1, 2006102,554
    
    
    16
    
    
    $
    84,599
    
    
    May 1, 2006102,554
    
    
    17
    
    
    $
    84,599
    
    
    June 1, 2006102,554
    
    
    18
    
    
    $
    84,599
    
    
    July 1, 2006102,554
    
    
    19
    
    
    $
    84,599
    
    
    August 1, 2006102,554
    
    
    20
    
    
    $
    84,599
    
    
    September 1, 2006102,554
    
    
    21
    
    
    $
    84,599
    
    
    October 1, 2006102,554
    
    
    22
    
    
    $
    84,599
    
    
    November 1, 2006102,554
    
    
    23
    
    
    $
    84,599
    
    
    December 1, 2006102,554
    
    
    24
    
    
    $
    87,137
    
    
    January 1, 2007102,554
    
    
    25
    
    
    $
    87,137
    
    
    February 1, 2007102,554
    
    
    26
    
    
    $
    87,137
    
    
    March 1, 2007102,554
    
    
    27
    
    
    $
    87,137
    
    
    April 1, 2007102,554
    
    
    28
    
    
    $
    87,137
    
    
    May 1, 2007102,554
    
    
    29
    
    
    $
    87,137
    
    
    June 1, 2007102,554
    
    
    30
    
    
    $
    87,137
    
    
    July 1, 2007102,554
    
    
    31
    
    
    $
    87,137
    
    
    August 1, 2007102,554
    
    
    32
    
    
    $
    87,137
    
    
    September 1, 2007
 - 2 -




---



##### 



Months into the
    
    Base Rent
    
    Due Date for MonthlySquare Feet
    
    Sublease term
    
    per Month
    
    Rental Payments102,554
    
    
    33
    
    
    $
    87,137
    
    
    October 1, 2007102,554
    
    
    34
    
    
    $
    87,137
    
    
    November 1, 2007102,554
    
    
    35
    
    
    $
    87,137
    
    
    December 1, 2007102,554
    
    
    36
    
    
    $
    89,751
    
    
    January 1, 2008102,554
    
    
    37
    
    
    $
    89,751
    
    
    February 1, 2008102,554
    
    
    38
    
    
    $
    89,751
    
    
    March 1, 2008102,554
    
    
    39
    
    
    $
    89,751
    
    
    April 1, 2008102,554
    
    
    40
    
    
    $
    89,751
    
    
    May 1, 2008102,554
    
    
    41
    
    
    $
    89,751
    
    
    June 1, 2008102,554
    
    
    42
    
    
    $
    89,751
    
    
    July 1, 2008102,554
    
    
    43
    
    
    $
    89,751
    
    
    August 1, 2008102,554
    
    
    44
    
    
    $
    89,751
    
    
    September 1, 2008102,554
    
    
    45
    
    
    $
    89,751
    
    
    October 1, 2008102,554
    
    
    46
    
    
    $
    89,751
    
    
    November 1, 2008102,554
    
    
    47
    
    
    $
    89,751
    
    
    December 1, 2008102,554
    
    
    48
    
    
    $
    92,443
    
    
    January 1, 2009102,554
    
    
    49
    
    
    $
    92,443
    
    
    February 1, 2009102,554
    
    
    50
    
    
    $
    92,443
    
    
    March 1, 2009102,554
    
    
    51
    
    
    $
    92,443
    
    
    April 1, 2009102,554
    
    
    52
    
    
    $
    92,443
    
    
    May 1, 2009102,554
    
    
    53
    
    
    $
    92,443
    
    
    June 1, 2009102,554
    
    
    54
    
    
    $
    92,443
    
    
    July 1, 2009102,554
    
    
    55
    
    
    $
    92,443
    
    
    August 1, 2009102,554
    
    
    56
    
    
    $
    92,443
    
    
    September 1, 2009102,554
    
    
    57
    
    
    $
    92,443
    
    
    October 1, 2009102,554
    
    
    58
    
    
    $
    92,443
    
    
    November 1, 2009102,554
    
    
    59
    
    
    $
    92,443
    
    
    December 1, 2009102,554
    
    
    60
    
    
    $
    95,217
    
    
    January 1, 2010102,554
    
    
    61
    
    
    $
    95,217
    
    
    February 1, 2010102,554
    
    
    62
    
    
    $
    95,217
    
    
    March 1, 2010102,554
    
    
    63
    
    
    $
    95,217
    
    
    April 1, 2010102,554
    
    
    64
    
    
    $
    95,217
    
    
    May 1, 2010
 Base Rent and Additional Rent, as defined in Paragraph 4.B below,
(collectively, hereinafter Rent) shall be paid in advance on or
before the first (1st) day of each month. Rent for any period during
the Term hereof which is for less than one (1) month of the Term shall
be a pro rata portion of the monthly installment based on a thirty
(30) day month. Rent shall be payable without notice or demand and
without any deduction, offset, or abatement, in lawful money of the
United States of America. Rent shall be paid directly to Sublandlord
at 46939 Bayside Parkway, Fremont, CA 94538, Attention: Chief
Financial Officer, or such other address as may be designated in
writing by Sublandlord. B. Additional Rent.All monies other than Base Rent required to
be paid by Subtenant under this Sublease, including, without
limitation, all amounts payable by Sublandlord under the Master Lease
applicable to the Subleased Premises shall be deemed additional rent
(Additional Rent). Subtenant acknowledges that Sublandlord is
required to pay to Master Landlord Building Operating Expenses (as
defined in the Master Lease) and estimated payments thereof and
adjustments thereto in accordance with the Master Lease. In addition
to all other Additional Rent set forth in this Sublease, Subtenant
shall pay to Sublandlord as Additional Rent hereunder, Subtenants pro
rata share of all of such Building Operating Expenses payable by
Sublandlord to Master Landlord pursuant to the terms and conditions of
the Master - 3 -




---



##### 



Lease. As used herein, the phrase Subtenants pro rata share shall mean that
amount, expressed as a percentage, equal to the number of square feet of
leasable area included in the Subleased Premises divided by the number of
square feet of leasable area in the Master Premises. Such amounts (including
estimated payments thereof and adjustments thereto in accordance with the
Master Lease) shall be payable by Subtenant no later than two (2) days before
the dates the same are due under the Master Lease; provided, however, that with
respect to any Subtenants Additional Rent not payable monthly by Sublandlord
to Master Landlord under the Master Lease, Subtenant shall have received at
least ten (10) days prior written notice of such payment, unless otherwise
provided for herein. Sublandlord shall promptly forward the appropriate
invoices received from Master Landlord. Subtenant and Sublandlord agree, as a
material part of the consideration given by Subtenant to Sublandlord for this
Sublease, that Subtenant shall pay Subtenants pro rata share of all costs,
expenses, taxes, insurance, maintenance and other charges of every kind and
nature to the extent Sublandlord shall be charged for such amounts pursuant to
the terms and conditions of the Master Lease, such that Sublandlord shall
receive, as net consideration for this Sublease, full reimbursement thereof.
Notwithstanding the foregoing, in the event that any cost, expense, tax,
insurance, maintenance or other charge of any kind is incurred under the Master
Lease for either Subtenants or Sublandlords sole benefit or as a result of
either Subtenants or Sublandlords request for certain additional services
(such as extra hours charges, etc.) or otherwise, the responsible party shall
pay the entire cost thereof, and such charges shall not be pro rated between
Sublandlord and Subtenant. Subtenant shall be separately metered for electric, gas and water service
to the Phase I Sublease Premises and shall install, as part of Subtenants
Improvements (as such term is defined below), meter or other equipment to
measure such service to the Phase II Subleased Premises. Subtenant shall pay
for all water, gas, heat, cooling, light, power, telephone and other utilities
and services to the Subleased Premises directly to the service provider. C. Prepayment of Rent.On or prior to January 15, 2005, Subtenant
shall pay to Sublandlord the sum of Seventy Thousand Thirty-Five Dollars
($70,035) which shall constitute Base Rent for the fifth (5th) month of the
Term. 5. Security Deposit:Upon execution of this Sublease by Subtenant,
Subtenant shall deposit with Sublandlord Ninety-Five Thousand Dollars ($95,000)
in immediately available funds as security for the performance by Subtenant of
its obligations under this Sublease, and not as a prepayment of rent (the
Security Deposit). If Subtenant Defaults under this Sublease, Sublandlord may
apply all or any part of the Security Deposit for the payment of any rent or
other sum in Default, the repair of any damage to the Subleased Premises caused
by Subtenant or the payment of any other amount which Sublandlord may spend or
become obligated to spend by reason of Subtenants Default or to compensate
Sublandlord for any other loss or damage which Sublandlord may suffer by reason
of Subtenants Default to the full extent permitted by law. Subtenant hereby
waives any restriction on the use or application of the Security Deposit by
Sublandlord as set forth in California Civil Code Section 1950.7. To the extent
any portion of the Security Deposit is used, Subtenant shall within ten (10)
days after demand from Sublandlord restore the Security Deposit to its full
amount. Sublandlord may keep the Security Deposit in its general funds and
shall not be required to pay interest to Subtenant on the Security Deposit.
Sublandlord shall return all of the remaining Security Deposit to Subtenant
within thirty (30) days after the Expiration Date or earlier termination of
this Sublease, less any amounts Sublandlord is entitled to in accordance with
this Paragraph 5. The Security Deposit shall not serve as an advance payment of
rent or a measure of Sublandlords damages for any Default under this Sublease.
Subtenant covenants and agrees that it shall not assign or encumber or attempt
to assign or encumber the Security Deposit and neither Sublandlord nor its
successors or assigns shall be bound by any such agreement, encumbrance,
attempted assignment or attempted encumbrance. - 4 -




---



##### 



6. Furniture: A.During the Term of the Sublease, Subtenant shall have the right to use
the furniture
currently existing in the Subleased Premises and outlined on Exhibit C-1
attached hereto (the Furniture)
and the equipment currently existing in the Subleased Premises and
outlined on Exhibit C-2 (the
Equipment) throughout the Term at no additional cost or charge. Such
Furniture and Equipment are
provided by Sublandlord in their AS IS condition, with all faults and
defects, and Subtenant shall use such
Furniture and Equipment at Subtenants sole risk. No representations or
warranties whatsoever as to the
Furnitures or the Equipments condition or fitness for a particular
purpose, express or implied, are made by
Sublandlord. Subtenant shall maintain and repair the Furniture and
Equipment, and shall surrender the
Furniture at the expiration or earlier termination of the Sublease, in the
same condition as received by
Subtenant, reasonable wear and tear excepted. Subtenant, at its sole cost,
may elect to remove from the
Subleased Premises and store items of Furniture and Equipment subject to
Sublandlords prior written
consent as to the items being removed, which consent shall not be
unreasonably withheld, conditioned or
delayed. Sublandlord hereby approves of Subtenants removal and storage of
the cubicles in the Phase II
Subleased Premises. Subtenant shall return (and reassemble) any removed
items of Furniture and Equipment
to the Subleased Premises at the expiration or earlier termination of the
Sublease, in the same condition as
received by Subtenant, reasonable wear and tear excepted. B.Subtenant at its cost (i) shall maintain All Risk property insurance
covering the
Furniture and Equipment for the full replacement cost thereof and (ii) as
Subtenants Additional Rent
hereunder, shall pay for any and all property taxes thereon. Upon notice
from Sublandlord, Subtenant shall
assign to Sublandlord (or to any party designated by Sublandlord) all
property insurance proceeds payable to
Subtenant under Subtenants insurance with respect to the Furniture and
Equipment; provided if the estimated
cost to replace such Furniture and Equipment exceeds the amount of
insurance proceeds received by
Sublandlord from Subtenants insurance carrier, the excess cost of such
replacement shall be paid by
Subtenant to Sublandlord. Sublandlord hereby represents and warrants to
Subtenant that Sublandlord has
good and marketable title to the Furniture and Equipment, free and clear
of any liens, charges, encumbrances,
security interests and adverse claims. The Furniture and Equipment shall
remain the personal property of
Sublandlord; provided, however, that as security for the performance of
all of Sublandlords obligations
under this Sublease, Sublandlord hereby assigns, pledges and grants to
Subtenant a security interest in and a
lien upon the Furniture and Equipment. Subtenant shall have the right to
file a financing statement
describing the Furniture and Equipment with the Secretary of State of the
State of Delaware. Sublandlord
shall give such notices and take such other actions, at Sublandlords sole
cost and expense, as may be
necessary to prevent any third party from dispossessing Subtenant of its
use of the Furniture and Equipment
during the Term. For the purposes of such security interest and lien,
this Sublease shall constitute a
security agreement within the meaning of the Uniform Commercial Code as
in effect in the State of
California. Notwithstanding anything to the contrary herein, such security
interest and lien on the Furniture
and Equipment shall terminate from and after the Expiration Date (whether
or not Sublandlord is in default
hereunder) or earlier termination of the Sublease for any reason other
than the default of Sublandlord;
provided, however, that if Subtenant enters into the Direct Lease (as
defined in the Consent to Sublease
attached hereto as Exhibit-F) with Master Landlord, such security interest
and lien and Subtenants rights and
obligations under this Paragraph 6 shall continue through the expiration
or earlier termination of the Direct
Lease (but in no event beyond May 16, 2010). 7. Late Charge:If Subtenant fails to pay Sublandlord any amount due
hereunder on or before the
fifth day after such payment is due more than one (1) time in any twelve
(12) month period or fails to pay
Sublandlord any amount due hereunder on or before the fifth day after
written notice of nonpayment,
Subtenant shall pay to Sublandlord upon demand a late charge equal to five
percent (5%) of the delinquent - 5 -




---



##### 



amount. The parties agree that the foregoing late charge represents a
reasonable estimate of the cost and expense which Sublandlord will
incur in processing each delinquent payment. Sublandlords acceptance
of any interest or late charge shall not waive Subtenants default in
failing to pay the delinquent amount. 8. Holdover:Subtenant acknowledges that it is critical that
Subtenant surrender the Subleased
Premises on or before the Expiration Date or earlier termination
of the Sublease in accordance with the terms
of this Sublease. Accordingly, Subtenant shall indemnify, defend
and hold harmless Sublandlord from and
against all losses, costs, claims, liabilities and damages
resulting from Subtenants failure to surrender the
Subleased Premises on the Expiration Date or earlier termination
of the Sublease in the condition required
under the terms of this Sublease (including, without limitation,
any liability or damages sustained by
Sublandlord as a result of a holdover of the Master Premises by
Sublandlord as a result of the holdover of the
Subleased Premises by Subtenant). In addition, Subtenant shall pay
Sublandlord holdover rent equal to one
hundred fifty percent (150%) of Base Rent (in addition to any
Additional Rent payable hereunder) for any
holdover period after the Expiration Date or earlier termination
of the Sublease through the date Subtenant
surrenders the Subleased Premises in the condition required
hereunder. 9. AS IS Condition:Except as expressly stated in this Sublease,
the parties acknowledge and agree
that Subtenant is subleasing the Subleased Premises on an AS IS
basis, and that Sublandlord has made no
representations or warranties, express or implied, whatsoever,
with respect to the Subleased Premises,
including, without limitation, any representation or warranty as
to the suitability of the Subleased Premises
for Subtenants intended use or any representation or warranty
made by Master Landlord under the Master
Lease. Sublandlord shall have no obligation whatsoever to make or
pay the cost of any alterations,
improvements or repairs to the Subleased Premises, including,
without limitation, any improvement or repair
required to comply with any law, regulation, building code or
ordinance (including the Americans with
Disabilities Act of 1990, as may be amended). Subtenant hereby
expressly waives the provisions of
subsection 1 of Section 1932 and Sections 1941 and 1942 of the
Civil Code of California and all rights to
make repairs at the expense of Sublandlord as provided in Section
1942 of said Civil Code. Not limiting the
generality of the foregoing, Sublandlord represents to and
warrants to Subtenant that as of the date hereof, to
the Sublandlords current knowledge, the lighting, heating,
ventilation and air conditioning, plumbing and
electrical systems in the Subleased Premises are in good working
order. 10. Master Landlords Obligations:Sublandlord agrees that
Subtenant shall be entitled to receive
all service and repairs to be provided by Master Landlord to
Sublandlord under the Master Lease with
regards to the Subleased Premises; provided, however, that
Sublandlord shall not be liable for any failure or
interruption of any such service or repairs except to the extent
caused by or arising from the negligence or
willful misconduct of Sublandlord or Sublandlord Related Parties
(as defined in Paragraph 12 below).
Sublandlord shall have no obligation to perform any repairs or any
other obligation of Master Landlord
required to be performed by Master Landlord under the terms of the
Master Lease (including, without
limitation, Master Landlords obligations under Articles 5, 6, 9,
10 and 11 of the Master Lease and Master
Landlords obligation to comply with laws and carry building
insurance). Sublandlord shall, however,
request performance of the same in writing from Master Landlord
promptly after being requested to do so by
Subtenant, and shall use Sublandlords reasonable efforts (not
including the payment of money, the incurring
of any liabilities, or the institution of legal proceedings) to
obtain Master Landlords performance. However,
in the event that (i) Master Landlord is in default under the
Master Lease beyond applicable notice and cure
periods and (ii) Subtenants use of the Subleased Premises is, or
Subtenants rights under this Sublease are,
materially and adversely affected by such default, then, upon
Subtenants request, Sublandlord shall permit
Subtenant to take legal action (an Action) against Master
Landlord at Subtenants sole cost and expense, in
which event, for that purpose and only to such extent,
Sublandlords rights under the Master Lease as
Tenant with respect to the Subleased Premises to institute such
legal action shall be assigned to Subtenant, - 6 -




---



##### 



and Subtenant shall be subrogated to such rights to the extent that the
same shall apply to the Subleased Premises. If any such Action against
Master Landlord shall be barred by reason of lack of privity,
nonassignability or otherwise, Subtenant may take such Action in
Sublandlords name at Subtenants sole cost and expense; provided
Subtenant obtains the prior written consent of Sublandlord, which
consent shall not be unreasonably withheld, conditioned or delayed. In
the event Subtenant brings an Action in accordance with this Paragraph
10, Sublandlord shall reasonably cooperate with Subtenant in
Subtenants prosecution of the same; provided, however, that such
cooperation shall be at no out-of-pocket cost to Sublandlord. Subtenant
shall indemnify, protect, defend by counsel reasonably satisfactory to
Sublandlord and hold Sublandlord harmless from and against any and all
liability, loss, claims, demands, suits, penalties or damage
(including, without being limited to, reasonable attorneys fees and
expenses) which Sublandlord may incur or suffer by reason of any Action
taken pursuant to this Paragraph 10. 11. Right to Cure Defaults:If Subtenant fails to pay any sum of
money to Sublandlord, or fails to
perform any other act on its part to be performed hereunder, then
Sublandlord may, but shall not be obligated
to, make such payment or perform such act. All such sums paid, and
all reasonable costs and expenses of
performing any such act, shall be deemed Additional Rent payable
by Subtenant to Sublandlord upon
demand, together with interest thereon at the lesser of (i) ten
percent (10%) per annum or (ii) the maximum
rate allowable under law (the Interest Rate) from the date of
the expenditure until repaid. Sublandlord
shall provide Subtenant five (5) business days notice prior to
making such payment or performing such act
unless sooner action is required to avoid a default under the
Master Lease. The notice requirement in the
preceding sentence shall not apply, however, to the payment of
Additional Rent payable on a monthly basis. 12. Indemnity.Except to the extent caused by the negligence or
willful misconduct of Sublandlord,
its agents, employees, directors, representatives, contractors or
invitees (other than Subtenant) (Sublandlord
Related Parties), Subtenant shall indemnify, defend with counsel
reasonably acceptable to Sublandlord,
protect and hold harmless Sublandlord and its agents, employees,
directors, shareholders, and representatives
from and against any and all losses, claims, liabilities,
judgments, causes of action, damages, costs and
expenses (including, without limitation, reasonable attorneys
fees) (collectively, Claims), caused by or
arising in connection with: (i) the use, occupancy, operation or
condition of the Subleased Premises; (ii) the
negligence or willful misconduct of Subtenant or Subtenant Related
Parties (as defined below); and (iii) a
breach of Subtenants obligations under this Sublease or the
provisions of the Master Lease with respect to
the Subleased Premises. Except to the extent caused by the
negligence or willful misconduct of Subtenant,
its agents, employees, directors, representatives, contractors or
invitees (Subtenant Related Parties),
Sublandlord shall indemnify, defend with counsel reasonably
acceptable to Subtenant, protect and hold
harmless Subtenant and its agents, employees, directors,
shareholders, and representatives from and against
any and all Claims caused by or arising in connection with: (1) a
breach of Sublandlords obligations under
this Sublease and, except to the extent such obligations are
assumed by Subtenant under this Sublease, the
Master Lease; and (2) the negligence or willful misconduct of
Sublandlord or Sublandlord Related Parties.
The indemnities in this Paragraph shall survive termination of
this Sublease. 13. Assignment and Subletting:Subject to the terms of Article 7
of the Master Lease, incorporated
herein, Subtenant may not assign any interest in this Sublease (by
operation of law or otherwise), sublet any
of the Subleased Premises, transfer any interest of Subtenant
therein or permit any use of the Subleased
Premises by another party (collectively, Transfer), without the
prior written consent of Sublandlord and, if
required under the Master Lease or the Consent to Sublease (as
defined below), Master Landlord.
Sublandlords consent shall not be unreasonably withheld provided,
however, Sublandlords withholding of
consent shall in all events be deemed reasonable if for any reason
Master Landlords consent is required but
not obtained. A consent to one Transfer shall not be deemed to be
a consent to any subsequent Transfer. - 7 -




---



##### 



Any Transfer without such consent shall be void and, at the option of
Sublandlord, shall be a material default under this Sublease.
Sublandlords waiver or consent to any assignment or subletting shall
be ineffective unless set forth in writing. Notwithstanding anything to
the contrary, in no event may Subtenant assign the Sublease, sub-sublet
the Subleased Premises or otherwise transfer Subtenants interest
herein if doing so could permit the Master Landlord to terminate the
Master Lease. Notwithstanding anything to the contrary contained herein
but subject to the preceding sentence, Subtenant may, without
Sublandlords prior written consent, but subject to Master Landlords
prior written consent to the extent required under the Master Lease or
the Consent to Sublease, sublet the Subleased Premises or assign the
Sublease to (a) an entity controlling, controlled by or under common
control with Subtenant, (b) a successor corporation related to
Subtenant by merger, consolidation, nonbankruptcy reorganization, or
government action, or (c) a purchaser of substantially all of
Subtenants assets. A sale or transfer of Subtenants capital stock
shall not be deemed an assignment, subletting or any other transfer of
the Sublease or the Subleased Premises. In the event of a Transfer
hereunder, Subtenant shall not be relieved from any of its obligations
under this Sublease. 14. Use: A.Subtenant may use the Subleased Premises for the Permitted
Use under the Master
Lease and for no other purpose whatsoever. B.Subtenant shall not use, store, keep, handle, manufacture,
transport, release, discharge,
emit or dispose of any Hazardous Materials (as defined in the
Master Lease) in, on, under, about, to or from
the Subleased Premises, except that Subtenant may use Hazardous
Materials contained in ordinary office
supplies of a type and in quantities typically used in the
ordinary course of business within business offices,
but only if and to the extent that such Hazardous Materials are
transported, stored and used in full
compliance with all applicable Hazardous Materials laws and
otherwise in a safe and prudent manner. Under
no circumstance shall Subtenant be liable for Hazardous Materials
present at any time on or about the
Project, or the soil, air, improvements, groundwater or surface
water thereof, or the violation of any laws,
orders or regulations, relating to any such Hazardous Material,
except to the extent that any of the foregoing
actually results from the release or emission of Hazardous
Materials by Subtenant or Subtenant Related
Parties. To the extent Sublandlord actually receives indemnity
from Master Landlord pursuant to Section
4.11 of the Master Lease with respect to Subtenants Hazardous
Materials Claims as hereinafter defined,
Sublandlord shall indemnify Subtenant and Subtenant Related
Parties from all losses, costs, claims, liabilities
and damages (including reasonable attorneys and consultants
fees) of every type and nature, directly or
indirectly arising out of or in connection with Hazardous
Materials present at any time on or about the
Project, or the soil, air, improvements, groundwater or surface
water thereof, or the violation of any laws,
orders or regulations, relating to any such Hazardous Material
(collectively, Subtenants Hazardous
Materials Claims), except to the extent that any of the foregoing
actually results from the release or
emission of Hazardous Materials by Subtenant or Subtenant Related
Parties. Notwithstanding the foregoing,
Sublandlords sole obligation under this Paragraph shall be to
request performance of such indemnification
obligations from Master Landlord in writing promptly after being
requested to do so by Subtenant, and to use
Sublandlords reasonable efforts (not including the payment of
money, the incurring of liabilities, or the
institution of legal proceedings) to obtain Master Landlords
performance. In the event that Master Landlord
defaults in its obligations under Section 4.11 of the Master
Lease, Subtenant shall have the right to take an
Action against Master Landlord in accordance with Paragraph 10
above. C.Subtenant shall comply with all reasonable rules and
regulations promulgated from time
to time by Sublandlord or Master Landlord. - 8 -




---



##### 



15. Effect
of Conveyance: As used in this Sublease, the term
Sublandlord means the holder of
the Tenants interest under the Master Lease. In the event of any
assignment or transfer of the Tenants
interest under the Master Lease, which assignment or transfer may
occur at any time during the Term hereof
in Sublandlords sole discretion, Sublandlord shall be and hereby
is entirely relieved of all covenants and
obligations of Sublandlord hereunder, and it shall be deemed and
construed, without further agreement
between the parties hereto, that any transferee has assumed and
shall carry out all covenants and obligations
thereafter to be performed by Sublandlord hereunder; provided,
however, that Sublandlord shall transfer and
deliver any security of Subtenant to such transferee, including,
without limitation, the Security Deposit, and
shall provide Subtenant with written evidence of such assumption. 16. Delivery
and Acceptance:This Sublease shall not be void or
voidable, nor shall Sublandlord be
liable to Subtenant for any loss or damage, by reason of delays in
Sublandlord delivering any portion of the
Subleased Premises to Subtenant for any reason whatsoever, subject,
however, to Subtenants right to
terminate this Sublease as provided for in Paragraph 3(A) above.
Subtenant has fully inspected the
Subleased Premises and is satisfied with the condition thereof. By
taking possession of the Subleased
Premises, Subtenant conclusively shall be deemed to have accepted
the Subleased Premises in its then-
existing, AS IS condition, without any representation or warranty
whatsoever from Sublandlord with
respect thereto, except as expressly provided for in Paragraph 9 of
this Sublease. 17. Improvements:Subtenant shall not make any alterations or
improvements to the Subleased
Premises (i) without the prior written consent of both Master
Landlord (if required under the Master Lease)
and Sublandlord, and (ii) except in accordance with the Master
Lease. Subtenant shall have the right to
select its own general contractor subject, however, to
Sublandlords and Master Landlords (if required under
the Master Lease) prior written consent to such contractor.
Sublandlords consents under this Paragraph
shall not be unreasonably withheld, conditioned or delayed,
provided, however, that Sublandlords
withholding of consent shall in all events be deemed reasonable if
for any reason Master Landlords consent
is not obtained. Sublandlord hereby approves of those certain
improvements to the Phase I Subleased
Premises described on Exhibit D hereto subject to Master
Landlords approval of the same (the Subtenant
Improvements). 18. Release and Waiver of Subrogation:Notwithstanding anything to
the contrary in this
Sublease, Sublandlord and Subtenant hereby release each other from
any damage to property or loss of any
kind which is caused by or results from any risk that normally
would be insured against under any property
insurance policy required to be carried by either party. This
release shall be in effect only so long as the
applicable insurance policy contains a clause to the effect that
this release shall not affect the right of the
insured to recover under the policy. Each party shall use its
reasonable efforts to cause each property
insurance policy obtained by it to provide that the insurer waives
all right of recovery against the other party
and its agents and employees in connection with any damage or
injury covered by the policy, and each party
shall notify the other party if it is unable to obtain a waiver of
subrogation. Subtenant shall not be entitled to
terminate this Sublease or to abate Rent nor shall Sublandlord,
except to the extent caused by or arising from
the negligence or willful misconduct of Sublandlord or Sublandlord
Related Parties, be liable to Subtenant
for the (i) failure or interruption of any utility system or
service or (ii) failure of Master Landlord to maintain
the Subleased Premises as may be required under the Master Lease.
In no event shall Sublandlord be liable
to Subtenant for any lost profit, damage to or loss of business or
any form of special, indirect or
consequential damage. 19. Insurance:Subtenant shall obtain and keep in full force and
effect, at Subtenants sole cost and
expense, during the Term the insurance required to be carried by
the Tenant under the Master Lease with
respect to the Subleased Premises and any property of Subtenant.
Subtenant shall include Sublandlord and - 9 -




---



##### 



Master Landlord as an additional insured in any policy of insurance
carried by Subtenant in connection with this Sublease and shall
provide Sublandlord with certificates of insurance upon Sublandlords
request. 20. Default:Subtenant shall be in material default of its
obligations under this Sublease if any of the following events occur
(each a Default): A.Subtenant fails to pay any Rent within five (5) days after written notice of
nonpayment; or B.Subtenant fails to perform any term, covenant or condition of
this Sublease (other than
the payment of Rent) and fails to cure such breach within twenty
(20) days after delivery of a written notice
specifying the nature of the breach; provided, however, that if
such breach cannot reasonably be cured within
such 20-day period, the cure period shall be extended as
reasonably necessary to cure such breach if
Subtenant commences curing such breach within such 20-day period
and diligently prosecutes the same to
completion; or C.the bankruptcy or insolvency of Subtenant, transfer by
Subtenant in fraud of creditors, an
assignment by Subtenant for the benefit of creditors, or the
commencement of any proceedings of any kind
by or against Subtenant under any provision of the Federal
Bankruptcy Act or under any other insolvency,
bankruptcy or reorganization act unless, in the event any such
proceedings are involuntary, Subtenant is
discharged from the same within thirty (30) days thereafter; D.the appointment of a receiver for a substantial part of
the assets of Subtenant; E.the levy upon this Sublease or any estate of Subtenant
hereunder by any attachment or
execution and the failure within twenty (20) days thereafter to
have such attachment or execution vacated or
such other action taken with respect thereto so as to put
Sublandlord at no risk of having an unconsented
transfer of this Sublease; F.Subtenant commits any other act or omission which could
constitute a default under the
Master Lease. 21. Remedies:In the event of any default by Subtenant,
Sublandlord shall have all remedies
provided to the Landlord under the Master Lease and all other
rights and remedies otherwise available at
law and in equity. Without limiting the generality of the
foregoing, Sublandlord shall have the remedy
described in California Civil Code Section 1951.4 (Sublandlord
may continue the Sublease in effect after
Subtenants breach and abandonment and recover rent as it becomes
due, if Subtenant has right to sublet or
assign, subject only to reasonable limitations). Sublandlord may
resort to its remedies cumulatively or in the
alternative. In the event of any default by Sublandlord,
Subtenant shall have all remedies provided to the
Tenant under the Master Lease and all other rights and remedies
otherwise available at law and in equity.
Subtenant may resort to its remedies cumulatively or in the
alternative. 22. Surrender:On or before the Expiration Date or any sooner
termination of this Sublease,
Subtenant shall remove all of its trade fixtures, personal
property and all alterations and improvements
constructed by Subtenant in the Subleased Premises which are
required to be removed under the terms of this
Sublease or the Master Lease, and shall surrender the Subleased
Premises to Sublandlord in good condition,
order and repair, reasonable wear and tear and damage by casualty
or condemnation excepted. Subtenant
shall repair any damage to the Subleased Premises caused by
Subtenants removal of its personal property,
furnishings and equipment, except to the extent such damage is
caused by the negligence or willful - 10 -




---



##### 



misconduct of Sublandlord or Sublandlord Related Parties. If the
Subleased Premises are not so surrendered, then Subtenant shall be
liable to Sublandlord for all reasonable out-of-pocket costs incurred
by Sublandlord in returning the Subleased Premises to the required
condition, plus interest thereon at the Interest Rate. 23. Broker:Sublandlord and Subtenant each represent to the other
that they have dealt with no real
estate brokers, finders, agents or salesmen in connection with
this transaction other than CB Richard Ellis
(CBRE) representing Subtenant and CPS, a Commercial Real Estate
Company, Inc. (CPS) representing
Sublandlord. Subtenant agrees to indemnify and hold Sublandlord
harmless from and against all claims for
brokerage commissions, finders fees or other compensation made by
any other agent, broker, salesman or
finder as a consequence of Subtenants actions or dealings with
such other agent, broker, salesman, or finder
or of Subtenants breach of the foregoing representation.
Sublandlord agrees to indemnify and hold
Subtenant harmless from and against all claims for brokerage
commissions, finders fees or other
compensation made by any other agent, broker, salesman or finder
as a consequence of Sublandlords actions
or dealings with such other agent, broker, salesman, or finder or
of Sublandlords breach of the foregoing
representation. 24. Notices:Unless at least five (5) days prior written notice
is given in the manner set forth in this
paragraph, the address of each party for all purposes connected
with this Sublease shall be that address set
forth below their signatures at the end of this Sublease. All
notices, demands or communications in
connection with this Sublease shall be properly addressed and
delivered as follows: (a) personally delivered;
or (b) submitted to an overnight courier service, charges prepaid;
or (c) deposited in the mail (certified,
return-receipt requested, and postage prepaid). Notices shall be
deemed delivered upon receipt, if personally
delivered, one (1) business day after being so submitted to an
overnight courier service and two (2) business
days after deposit in the United States mail, if mailed as set
forth above. All notices given to Master
Landlord under the Master Lease shall be considered received only
when delivered in accordance with the
Master Lease. 25. Other Sublease Terms: A. Incorporation By Reference.Except as set forth below and
except as otherwise provided in this Sublease, the terms and conditions
of this Sublease shall include all of the terms of the Master Lease and
such terms are incorporated into this Sublease as if fully set forth
herein, except that: (i) each reference in such incorporated sections
to Lease shall be deemed a reference to this Sublease; (ii) each
reference to the Premises shall be deemed a reference to the
Subleased Premises; (iii) each reference to Landlord shall be
deemed a reference to Sublandlord and each reference to Tenant
shall be deemed a reference to Subtenant, except as otherwise
expressly set forth herein; (iv) with respect to work, services,
utilities, electricity, repairs (or damage caused by Master Landlord),
restoration, insurance, indemnities, reimbursements, representations,
warranties or the performance of any other obligation of Landlord
under the Master Lease, whether or not incorporated herein, the only
obligations of Sublandlord shall be as set forth in Paragraph 10 of
this Sublease; (v) with respect to any obligation of Subtenant to be
performed under this Sublease, wherever the Master Lease grants to
Tenant a specified number of days to perform its obligations under
the Master Lease (including, without limitation, curing any defaults),
except as otherwise provided herein, Subtenant shall have three (3)
fewer days to perform the obligation or one-half the time period
permitted under the Master Lease, which ever allows Subtenant the
greater amount of time, provided that in no event shall such period be
shortened to a duration of less than two (2) business days for the
purposes of this Sublease, unless sooner action is required to avoid a
default under the Master Lease; (vi) with respect to any approval
required to be obtained from the Landlord under the Master Lease,
such approval must be obtained from both Master Landlord and
Sublandlord, and Sublandlords withholding of approval shall in all
events be deemed reasonable if for any reason Master Landlords
approval is not - 11 -




---



##### 



obtained; (vii) in any case where the Landlord reserves or is granted
the right to manage, supervise, control, repair, alter, regulate the use
of, enter or use the Premises or any areas beneath, above or adjacent
thereto, such reservation or grant of right of entry shall be deemed to
be for the benefit of both Master Landlord and Sublandlord; (viii) in
any case where Tenant is to indemnify, release or waive claims against
Landlord, such indemnity, release or waiver shall be deemed to run
from Subtenant to both Master Landlord and Sublandlord; (ix) in any case
where Tenant is to execute and deliver certain documents or notices to
Landlord, such obligation shall be deemed to run from Subtenant to
both Master Landlord and Sublandlord; and (x) the following
modifications shall be made to the Master Lease as incorporated herein: (a) the following provisions of the Master Lease are not
incorporated herein:
Sections 1.1 (except 1.1.M and 1.1. Q), 2.1, 2.3, 2.4, 2.5, 3.1,
3.4, 3.5, 3.6, 4.5 (first sentence), 4.6 (last
sentence), 4.11 (last two sentences), 6.1 (last two sentences), 7.1
(fourth and fifth sentences), 7.3(a), 7.5 (last
sentence), 9.3, 12.1, 13.3 (last sentence), 13.9, 13.11(subsections
D, E and F), Exhibit C, and Option to
Renew Lease; (b) references to Initial Tenant Improvements shall
be deleted; (c) reference to fifty percent in Section 7.4(f) of the Master
Lease shall be
changed to seventy-five percent; (d) in the event that Sublandlord, as Tenant, actually receives a
rent abatement
under the Master Lease for all or a portion of the Subleased
Premises, Subtenant shall be entitled to a
proportionate abatement of Subtenants Rent in the amount payable
hereunder with respect to the portion of
the Subleased Premises affected; provided, however, any right to
abate rent shall not exceed the rent actually
abated under the Master Lease with respect to the Subleased
Premises. B. Assumption of Obligations.This Sublease is and at all times
shall be subject and
subordinate to the Master Lease and the rights of Master Landlord
thereunder. Subtenant hereby expressly
assumes and agrees: (i) to comply with all provisions of the
Master Lease; and (ii) to perform all the
obligations on the part of the Tenant to be performed under the
terms of the Master Lease with respect to
the Subleased Premises during the Term. In the event the Master
Lease is terminated for any reason
whatsoever, this Sublease shall terminate simultaneously with such
termination without any liability of
Sublandlord to Subtenant; provided, however, that Sublandlord
shall remain liable for any such termination
caused by the default of Sublandlord under the Master Lease which
was not caused by a Default hereunder
by Subtenant. In the event of a conflict between the provisions of
this Sublease and the Master Lease, as
between Sublandlord and Subtenant, the provisions of this Sublease
shall control. C. Preservation of Master Lease.Sublandlord shall not voluntarily
terminate the Master
Lease except (i) pursuant to Article 10 or Article 11 of the
Master Lease or (ii) as a result of a default by
Master Landlord under the Master Lease that materially and
adversely affects Sublandlords rights as Tenant
under the Master Lease. Except to the extent such obligations are
assumed or agreed to be performed by
Subtenant under this Sublease, and except those obligations which
Sublandlord contests in good faith,
Sublandlord shall perform all of its obligations under the Master
Lease during the Term (unless the failure to
perform is caused in whole or in part by Subtenant or Subtenant
Related Parties). 26. Right to Contest:If Sublandlord does not have the right to
contest any matter in the Master Lease due to expiration of any time
limit that may be set forth therein or for any other reason, then
notwithstanding any incorporation of any such provision from the Master
Lease in this Sublease, Subtenant shall also not have the right to
contest any such matter. - 12 -




---



##### 



27. Parking.Subtenant shall have the exclusive right to use three
and one-half (31⁄2) parking spaces
per 1,000 square feet of leasable area of the Subleased Premises
(i.e., 306 parking spaces (87,544 ÷ 1,000 x
3.5) commencing on February 1, 2005 and an additional 53 parking
spaces (15,010 ÷ 1,000 x 3.5)
commencing on January 1, 2006). Subtenants initial 306 and
subsequent 53 parking spaces are highlighted
on Exhibit E. attached hereto and incorporated herein by this
reference. Subtenant shall not permit its
employees to park in any other parking spaces serving the Master
Premises. 28. Signage.Subject to the requirements of Section 4.6 of the
Master Lease (including, without
limitation, obtaining Landlords consent) and subject to
Sublandlords prior written approval as to the design,
location and specifications (which approval shall not be
unreasonably withheld), Subtenant shall have the
right to install, at its sole cost and expense, signage at the
Subleased Premises to the extent permitted by the
City of Fremont, including, but not limited to: (A) on the
existing monument at the driveway entrance to the
Phase I Premises along Bayside Parkway; (B) on the existing
monument at the corner of Gateway Boulevard
and Bayside Parkway; (C) on the rear entrance sign at the driveway
along Gateway Boulevard; and (D) on
the exterior of the 47071 Building. 29. Security Service:Subtenant acknowledges that Sublandlord is
not responsible for the security
of the Subleased Premises or the protection of Subtenants
property or Subtenants employees, invitees or
contractors, and that to the extent Subtenant determines that such
security or protection services are advisable
or necessary, Subtenant shall arrange for and pay the costs of
providing the same. If Subtenant shall use the
security system currently installed in the Subleased Premises, it
shall contact Sonitrol Corporation
(Sonitrol) directly to initiate the security service.
Sublandlord shall provide Subtenant with Sonitrols
contact information immediately upon request. With respect to the
Sonitrol system in 46939 Building,
Sublandlord, at Sublandlords cost, shall cause Sonitrol to
separate the controls for the Sublandlords portion
of the 46939 Building from the controls for the Phase II Subleased
Premises. 30. Conditions Precedent:Notwithstanding anything to the contrary
in this Sublease, this Sublease
and Sublandlords and Subtenants obligations hereunder are
conditioned upon Master Landlords execution
and delivery of the Consent to Sublease in the form attached
hereto as Exhibit F to the Lease. Sublandlord
shall deliver the Consent to Sublease and the fully executed
Sublease to Landlord within five (5) business
days following full execution and delivery of this Sublease. If,
within thirty (30) days after such delivery,
Master Landlord does not execute such Consent to Sublease or such
executed Consent to Sublease is not
delivered to Subtenant, then either party may terminate this
Sublease by giving the other written notice
thereof prior to receipt of such Consent to Sublease from Master
Landlord. 31. Amendment:This Sublease may not be amended except by the
written agreement of all parties
hereto. 32. Counterparts:This Sublease may be executed in one (1) or more
counterparts each of which
shall be deemed an original but all of which together shall
constitute one (1) and the same instrument.
Signature copies may be detached from the counterparts and
attached to a single copy of this Sublease
physically to form one (1) document. 33. Drafting Presumption:The parties acknowledge that this
Sublease has been agreed to by both
the parties, that both Sublandlord and Subtenant have consulted
with attorneys with respect to the terms of
this Sublease and that no presumption shall be created against
Sublandlord because Sublandlord drafted this
Sublease. - 13 -




---



##### 



34. Entire
Agreement:This Sublease constitutes the entire agreement
between the parties, and
there are no binding agreements or representations between the parties
except as expressed herein. No
subsequent change or addition to this Lease shall be binding unless in
writing and signed by the parties
hereto. 35. Quiet Enjoyment.Sublandlord covenants that, so long as there is no
Default hereunder,
Subtenant shall and may peacefully have, hold and enjoy the Subleased
Premises without ejection by any
person lawfully claiming by, through or under Sublandlord. [SIGNATURE PAGE FOLLOWS] - 14 -




---



##### 



IN WITNESS WHEREOF,the parties have executed this Sublease as of
the day and year first
above written. (SEAL) SUBLANDLORD:
    
    SUBTENANT:VA SOFTWARE CORPORATION
    
    AT ROAD INC.By:
    
    /s/ Kathleen R Mcelwee
    
    By:
    
    /s/ Krish PanuPrint Name: KATHLEEN R MCELWEE
    
    Print Name: KRISH PANUTitle: VP + CFO
    
    Title: CEO / PRESIDENTAddress:
    
    Address: (from and after January 7, 2005)46939 Bayside Parkway
    
    47071 Bayside ParkwayFremont, CA 94538
    
    Fremont, CA 94538Attention: Chief Financial
    
    Attention: Mr. Robert Williamswith a copy to:47071 Bayside ParkwayFremont, CA 94538Attention: Legal Department(prior to January 7, 2005)47200 Bayside ParkwayFremont, CA 94538Attention: Mr. Robert Williamswith a copy to:47200 Bayside ParkwayFremont, CA 94538Attention: Legal Department
 -15-




---



##### 



Exhibit A SINGLE TENANT LEASE FORM
(NET FORM) THIS LEASE, dated
April 6, 2000 for reference purposes only, is made
by and between RENCO INVESTMENT COMPANY (Landlord) and VA LINUX SYSTEMS CORPORATION, a Delaware
Corporation (Tenant), to be effective and binding upon the parties as of the date the last of
the designated signatories to this Lease shall have executed this Lease (the Effective Date of this Lease). ARTICLE 1
REFERENCES 1.1 REFERENCES: All references in this Lease (subject to any
further clarifications contained in this Lease) to the following term shall have the following meaning or
refer to the respective address, person, date, time period, amount, percentage, calendar year or fiscal year as
below set forth: A. Tenants Address for Notices:
    
    VA LINUX SYSTEMS, INCORPORATEDB. Tenants Representative:
    
    Mr. Todd SchullBusiness Phone Number:Home Phone Number:Home Address:C. Landlords Address for Notices:
    
    1285 Oakmead Parkway, Sunnyvale, CA 94086D. Landlords Representative:
    
    Gerald E. HodnefieldPhone Number:
    

    (408)730-5500E. Lease Commencement Date:
    
    June 1, 2000F. Lease Term:
    
    Ten (10) YearsG. Lease Expiration Date:
    
    May 31, 2010H. Tenants Punchlist Period:
    
    Thirty calendar days from delivery of The Premises to TenantI. First Months Prepaid Rent:
    
    $ 243,794.00J. Last Months Prepaid Rent:
    
    NoneK. Tenants Security Deposit:
    
    $ 250,000.00L. Late Charge Amount:
    
    Six (6%) Percent of the late amount(s)M. Tenants Liability Coverage:
    
    Three Million
($3,000,000) Dollar Single LimitN. Parking Spaces:
    
    All spaces provided within the Project
 O. Leased Premises: That certain space which is a combination of
buildings containing 139,311 square feet
of leasable area referred to as Renco 42 and Renco 47 (the
Project or the Property), which space is shown
outlined in red on the Floor Plan attached hereto as Exhibit B
consisting of approximately 139,311 square feet
of leasable area measuring to the outside edge of the outside
walls and drip lines, but not including the connecting
hallway, and, for purposes of this Lease, agreed between Landlord
and Tenant to contain said number of square feet.
The Leased Premises are commonly known by address as follows:
47071 and 46939 Bayside Parkway, Fremont
California, 94538. P. Base
Monthly Rent: The term Base Monthly Rent shall mean the
amount of rent due and payable on
the first day of each month of the Lease Term, which for purposes of
this Lease is agreed to be the monthly sum of
$243,794.00 for each full month of the first year of the Lease Term
$251,108.00 for each full month of the second
year of the Lease Term, $258,641.00 for each full month of the
third year of the Lease Term $266,401.00 for each
full month of the fourth year of the Lease Term, $274.393.00 for
each full month of the fifth year of the Lease
Term $282.624.00 for each full month of the sixth year of the Lease
Term, $291,103.00 for each full month of the
seventh year of the Lease Term, $299,836.00 for each full month of
the eighth year of the Lease Term,
$308.831.00 for each full month of the ninth year of the Lease
Term, and $318,096.00 for each full month of the
tenth year of the Lease Term. Any partial month shall be prorated
on the basis of a 30 day month. Q. Permitted Use: The term Permitted Use shall mean that
Landlord and Tenant agree that Tenant
shall use the Premises for: manufacture, assembly, repair, sales,
marketing and distribution of electronic parts and
components, internet services, and related office and support
functions and for no other use R. Exhibits: The term Exhibits shall mean the Exhibits to
this Lease which are described as follows: Exhibit A -
    
    Site Plan showing the Project (or Property) and delineating the Building in which the Leased Premises are located.Exhibit B -
    
    Floor Plan outlining the Leased Premises.Exhibit C -
    
    Tenant Improvements Agreement
 S. Addenda: The term Addenda shall mean the Addendum (or
Addenda) to this Lease which is (or are)
described as follows: Signage CriteriaOption to Renew LeaseLetter of Credit securitizing Lease costs
 ARTICLE 2
LEASED PREMISES, TERM AND POSSESSION 2.1 LEASE OF PREMISES:Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord that certain interior space
described above as the Leased Premises
(or Premises). Landlord reserves the right to install, maintain, use and replace ducts, wires, conduits and pipes
leading through the Leased Premises in locations which will not
materially interfere with Tenants use of the Leased
Premises. Tenants use of the Leased Premises, together with the
appurtenant right to use the Common Areas shall be
conditioned upon and be subject to the continuing compliance by Tenant with (I) all the terms and conditions of
the Lease, (ii) all Laws governing the use of the Leased
Premises and the Project, (iii) all Private
Restrictions, easements and other matters now of public record respecting the use of the Leased Premises and the Project, and
(iv) all reasonable rules and regulations from time to time established by Landlord.




---



##### 



2.2 RIGHT TO USE COMMON AREAS:As an appurtenant right to Tenants right
to the use of the Leased Premises. Tenant shall have the exclusive right, except to the
extent noted elsewhere herein, to use the Common Areas. 2.3 LEASE COMMENCEMENT DATE AND LEASE TERM:The term of this Lease shall begin, and the Lease Commencement Date shall be deemed to have occurred, on the
Commencement Date (as set forth in Article 1.1 The term of the Lease shall expire on the Lease Expiration
Date, subject, however, to the Option to Renew Lease attached hereto. 2.4 DELIVERY OF POSSESSION:Landlord shall deliver to Tenant possession of the Leased Premises on
the business day subsequent to the delivery of all fully executed lease
documents, lease exhibits, and lease addenda together with all monies required thereof from Tenant to Landlord. 2.5
ACCEPTANCE OF POSSESSION:Upon the expiration of Tenants
Punchlist Period. Tenant shall
be conclusively deemed to have accepted the condition of the Leased
Premises in their then-existing condition as so delivered by Landlord to Tenant, except as to those Items reasonably set
forth in the punchlist submitted to Landlord prior to the expiration of said period. Landlord agrees to correct all
items reasonably set forth in Tenants punchlist, at Landlords sole cost and expense, provided that such punchlist was
submitted to Landlord within Tenants Punchlist Period. The punchlist items shall consist of making the repairs
and effecting the service as noted below, and shall be limited to
such. Landlord agrees to place in good working
order all existing plumbing, lighting, ceiling tiles, skylights (including replacing cracked or duct-taped skylights),
elevator, electrical systems, heating, ventilating and air conditioning systems within the Leased Premises and all man doors
and roll-up truck doors serving the Leased Premises to the extent that such systems and/or items are not in good
operating condition as of the date Tenant excepts possession of the Leased Premises, or as quickly thereafter as can
be reasonably accomplished, provided that, and only if, Tenant notifies Landlord in writing of such failures or
deficiencies within thirty calendar days from the date Tenant so accepts possession of the Leased Premises.
Notwithstanding the foregoing, Landlord warrants and represents that the Leased Premises shall comply with all Laws,
(including, without limitation, the ADA) as of the Lease Execution Date. 2.6 SURRENDER OF POSSESSION:Immediately prior to the expiration or
sooner termination of this Lease, Tenant shall remove all of Tenants signs from the exterior of
the Building and shall remove all of Tenants equipment, trade fixtures, furniture, supplies, wall decorations and
other personal property from the Leased Premises and shall vacate and surrender the Leased Premises to Landlord in the
same condition, broom clean, as existed at the Lease Commencement
Date, reasonable wear and tear, damage from casualty
and condemnation, and the Initial Tenant Improvements excepted. Landlord, at Tenants expense, shall
retain a mechanical contractor to service all heating, ventilation and air conditioning equipment, and Tenant shall
pay the cost to restore (or replace as required), said equipment to good working order. Tenant shall repair all damage to
the Leased Premises caused by Tenant or by Tenants removal of Tenants property and all damage to the exterior of
the Building caused by Tenants removal of Tenants signs. Tenant shall patch and refinish to Landlords
reasonable satisfaction, all penetrations made by Tenant or its employees to the floor, walls or ceiling of the Leased Premises,
whether such penetrations were made with Landlords approval or not. Tenant shall replace all stained or damaged
ceiling tiles and shall repair or replace, as necessary, all wall
coverings and clean or replace, as may be required,
floor coverings to the reasonable satisfaction of Landlord. Tenant shall replace all burned out light bulbs and damaged or
stained light lenses. Tenant shall repair all damage caused by Tenant to the exterior surface of the Building and the
paved surfaces of the outside areas adjoining the Leased Premises and, where necessary, replace or resurface same.
Additionally, Tenant shall, prior to the expiration or sooner termination of this Lease, remove any improvements
constructed or installed by Tenant, (other than the Initial Tenant Improvements), which Landlord requests, at the time
of consent to such improvements, be so removed by Tenant and repair all damage caused by such removal. If the
Leased Premises are not surrendered to Landlord in the condition required by this Article at the expiration or
sooner termination of this Lease, Landlord may, at Tenants expense, so remove Tenants signs, properly and/or
improvements not so removed and make such repairs and replacements not so made or hire, at Tenants expense, independent
contractors to perform such work. Tenant shall be liable to Landlord for all costs incurred by Landlord in
returning the Leased Premises to the required condition and Tenant shall be deemed to have impermissibly held over
until such time as such required work is completed. Tenant shall pay Base Monthly Rent and Additional Rent in
accordance with the terms of Section 13.2 (Holding Over) until such work is completed. ARTICLE 3
RENT, LATE CHARGES AND SECURITY DEPOSITS 3.1 BASE MONTHLY RENT:Commencing on the Lease Commencement Date and continuing throughout the Lease Term. Tenant shall pay to Landlord, without prior written or
oral demand in advance on the first day of each calendar month, as
bass monthly rent. The amount set forth as Base Monthly
Rent in Article I. 3.2 ADDITIONAL RENT:Commencing on the Lease Commencement Date and continuing throughout the
Lease Term, in addition to the Base Monthly Rent, Tenant shall pay to
Landlord as additional rent (the Additional Rent) all Building Operating Expenses (as defined in Article 13). Payment
shall be made by one of the following methods: Landlord may bill to Tenant, on a periodic basis not more frequently
than monthly, such expenses (or group of expenses) as paid or incurred by Landlord, and Tenant shall pay
such expenses within ten days after receipt of a written bill therefore from Landlord; and/or Landlord may budget the
annual projected expenses and bill to Tenant on a monthly basis, one-twelfth of the annual amount. If Landlord
elects the latter of the alternatives, Landlord shall reconcile the budgeted amounts with the actual amounts on an
annual basis during the first quarter of the subsequent year and bill Tenant for any additional amounts or credit
Tenant any overpayments against future Additional Rent amounts. 3.3
LATE CHARGE AND INTEREST ON RENT IN DEFAULT:Tenant acknowledges
that the late payment by Tenant of any monthly installment of Base Monthly Rent or any
Additional Rent will cause Landlord to incur certain costs and expense not contemplated under this Lease, the exact
amounts of which are extremely difficult or impractical to fix. Such costs and expenses will include, without
limitation, administration and collection costs and processing and
accounting expenses. If any installment of Base Monthly
Rent or Additional Rent is not received -2-




---



##### 



by Landlord from Tenant within six calendar days after the same
becomes due, tenant shall immediately pay to Landlord a late charge in an amount equal to six percent of the
amounts due and not so paid. Landlord and Tenant agree that this late charge represents a reasonable estimate of
such costs and expenses and is fair compensation to Landlord for the anticipated loss Landlord would suffer by reason
of Tenants failure to make timely payment. In no event shall this provision for a late charge be deemed to grant to
Tenant a grace period or extension of time within which to pay any rental installment or prevent Landlord from
exercising any right or remedy available to Landlord upon Tenants failure to pay each rental installment due under
this Lease when due. If any rent remains delinquent for a period in excess of six calendar days, then, in addition to such
late charge. Tenant shall pay to Landlord interest on any rent that is not so paid from said sixth day at the then
maximum rate of interest not prohibited by Law until paid. Notwithstanding the foregoing, no such late charge shall be
payable on the first such failure to pay Base Monthly Rent or
Additional Rent in any twelve (12) month period
unless Landlord shall have given Tenant notice of such failure to pay and Tenant fails to pay such Base Monthly Rent
or Additional Rent within five (5) days of such notice. 3.4 PAYMENT OF RENT:All rent shall be paid without any
abatement, deduction or offset for any reason whatsoever, to Landlord at such address as Landlord may
designate from time to time. Tenants obligation to pay Base Monthly Rent and all Additional Rent shall be prorated at
the commencement and expiration of the Lease Term. The failure by Tenant to pay any Additional Rent as required
pursuant to this Lease when due shall be treated the same as a failure by Tenant to pay Base Monthly Rent when due,
and Landlord shall have the same rights and remedies against Tenant
as Landlord would have if Tenant failed
to pay the Base Monthly Rent when due. 3.5 SECURITY DEPOSIT:Upon signing this Lease, Tenant shall
immediately deposit with Landlord the amount set forth in Article 1 as the Security Deposit as
security for the performance by Tenant of the terms of this Lease and not as prepayment of rent. Landlord may apply such
portion or portions of the Security Deposit as are reasonably necessary for the following purposes: (i) to remedy
any default (beyond applicable notice and cure periods) by Tenant in the payment of Base Monthly Rent or Additional Rent
or a late charge or interest on defaulted rent; (ii) to repair damage to the Leased Premises caused by Tenant; (iii)
to clean and repair the Leased Premises following their surrender to Landlord if not surrendered in the condition
required pursuant to the provisions of Article 2; and (iv) to remedy any other default of Tenant to the extent permitted by
Law including, without limitation, paying in full on Tenants behalf any sums claimed by materialmen or
contractors of Tenant to be owing to them by Tenant for work done or improvements made at Tenants request to the Leased
Premises. Tenant shall not be entitled to any interest on the Security Deposit. If Landlord transfers the
Building during the Lease Term, Landlord may pay the Security Deposit to any subsequent owner in conformity with the
California Civil Code, in which event the transferring landlord shall be released from all liability for
the return of the Security Deposit. In no event shall the Security Deposit, or any portion thereof, be considered prepaid
rent. 3.6 LETTER OF CREDIT:As additional consideration for Landlords
entering into this Lease and performing under its terms and
conditions, Tenant agrees to
provide Landlord with an irrevocable letter of credit in a form reasonably satisfactory to Landlord in the amount of Two
Million, Two Hundred and Fifty Thousand ($2,250,000.00) Dollars. Such Letter of Credit shall be annually
renewed and Tenant shall provide Landlord with such Letter of Credit for a minimum period of Five years
commencing with the Commencement Date and Expiring at the end of the Sixtieth month thereafter if, and only if,
Tenant has not been in material default have the Lease or its terms beyond applicable notice and cure periods. Such Letter of
Credit shall be reduced by Twenty (20%)Percent of its original face amount ($450,000.00) on each anniversary date
of the Commencement Date such that by the end of the sixtieth month of the Lease Term, the remaining amount of the
Letter of Credit shall be cancelled. In the event of a material default beyond applicable notice and cure periods
on the part of Tenant during the term of the Letter of Credit, the Letter of Credit amount shall be renewed at the level
existing at the time of said material default and shall be renewed
each year of the Lease Term at such level during the
remainder of the Lease Term. The Letter of Credit shall have the following provisions: 1) In the event a material default beyond applicable notice and
cure periods by Tenant has occurred and is continuing, Landlord shall be entitled to make a draw for
the sum of the face amount of the Letter of Credit, or any portion thereof, 2) Landlord shall be entitled to make a draw for the sum of the
face amount of the Letter of Credit in the event Tenant fails, within 30 days prior to the expiration
of the existing Letter of Credit, to deliver a new Letter of Credit
to Landlord in the amount agreed upon under the
terms of this Lease. 3) The Letter to Credit shall be transferable in whole but
not in part to a new owner and Landlord. 4) Partial drawing shall be allowed. 5) The Letter of Credit shall be subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce
Publication 500. 6) The Letter of Credit shall be from a US National Bank
(reasonably acceptable to Landlord) with a branch located in the Greater San Francisco Bay Area. It is hereby agreed between Landlord and Tenant that any amounts
drawn on the Letter of Credit by Landlord shall be used by Landlord to satisfy Tenants breach of the Lease and/or to
reimburse Landlord for damages occasioned by a breach of the Lease which may include, without limitation, the
following: (a) Landlords brokerage commissions with respect to the Lease; (b) Landlords Tenant Improvement Costs
pursuant to Exhibit C of the Lease; and (c) Landlords legal expenses occasioned by the breach. It is
expressly agreed, however, that the foregoing shall not in any way modify the Letter of Credit nor create any defense or
excuse for the bank paying all or any portion of the Letter of Credit upon Landlord complying with the draw
requirements set forth in the Letter of Credit. Should Landlord inadvertently draw down the Letter of Credit more than is
necessary to cure such Lease breaches, such excess shall be added to
the Security Deposit under Article 3.5
above. ARTICLE 4
USE OF LEASED PREMISES AND COMMON AREAS 4.1
PERMITTED USE:Tenant shall be entitled to use the Leased
Premises solely for the Permitted Use as set forth in
Article 1 and for no other purpose whatsoever.
Subject to the limitations contained in this Article 4,
Tenant shall have the right to use the common Areas, solely for the purpose for which they were intended and for -3-




---



##### 



no other purposes whatsoever. Tenant shall not have the right to use the exterior surfaces of exterior walls without
the prior written consent of Landlord. 4.2 GENERAL LIMITATIONS ON USE:Tenant shall not do or permit anything to be done in or about the Leased Premises, the Building, the Common Areas or the
Project which does or could (i) interfere with the rights of neighboring tenants, (ii) jeopardize the structural integrity
of the Building or the Project, or (iii) cause damage to any part of the Building or the Project. Tenant shall not operate
any equipment within the Leased Premises which does or could (i) injure, vibrate or shake the Leased Premises or
the Building, (ii) damage, overload, corrode, or impair the efficient operation of any electrical, plumbing,
sewer, healing, ventilating or air conditioning systems within or servicing the Leased Premises or the Building or (iii) damage or impair the efficient operation of the
sprinkler system within or servicing the Leased Premises or the Building. Tenant shall not install any equipment or
antennas on or make any penetrations of the exterior walls or roof of the Building. Tenant shall not affix any
equipment to or make any penetrations or cuts in the floor, celling or walls of the Leased Premises. Tenant shall not
place any loads upon the floors, walls, celling or roof systems which could endanger the structural integrity of the
Building or damage its floors, foundations or supporting structural
components. Tenant shall not place any
explosive, flammable or harmful fluids, including Hazardous Materials in any sanitary or storm sewer or place any
waste materials in the storm drainage systems of the Building or the
Project. Tenant shall not drain or discharge any
fluids in the landscaped areas or across the paved areas of the Project. Tenant shall not use any area located outside
the Leased Premises for the storage of its materials, supplies, inventory or equipment, and all such materials,
supplies, inventory and equipment shall at all times be stored within the Leased Premises. Tenant shall not commit
nor permit to be committed any waste in or about the Leased Premises, the Common Areas or the Project. 4.3
NOISE AND EMISSIONS:All noise generated by Tenant in its use of
the Leased Premises shall be confined or muffled so that it does not interfere with the
businesses of or annoy neighboring tenants. All dust, fumes, odors and other emissions generated by Tenants use of the
Leased Premises shall be sufficiently dissipated in accordance with sound environmental practices and exhausted from
the Leased Premises in such a manner so as not to interfere with the businesses of or annoy neighboring tenants, or
cause any damage to the Leased Premises or the Building or any component part thereof or the property of
neighboring tenants. 4.4 TRASH DISPOSAL:Tenant shall provide trash and garbage
disposal facilities inside the Leased Premises for all of its trash, garbage and waste requirements unless
Landlord shall have provided fenced areas for dumpsters and shall cause such trash, garbage and waste to be regularly removed from the Leased Premises at Tenants sole cost.
Tenant shall keep all areas outside the Leased Premises and all fire corridors and mechanical equipment rooms in or
about the Leased Premises free and clear of all trash, garbage, waste and boxes containing same at all times. 4.5 PARKING:Tenant and its employees and invitees shall have the exclusive right to use all of the of parking
spaces provided within the Project. In the event Landlord is
required by any Law to limit or control parking within
the Project, whether by validation of parking tickets or any
other method. Tenant agrees to participate in such validation or other program as reasonably established by Landlord. Tenant shall not, at any time, park or permit to be
parked any trucks or vehicles adjacent to entryways or loading areas within the Project so as to interfere in any way
with the use of such areas, nor shall Tenant, at any time, park or permit the parking of Tenants trucks or other
vehicles, or the trucks and vehicles of Tenants suppliers or
others, in any portion of the Common Areas not
designated by Landlord for such use. Tenant shall not, an any time, park or permit to be parked any recreational
vehicles, inoperative vehicles or equipment on any portion of the common parking area or other Common Areas of
the Project. Tenant agrees to assume responsibility for compliance by its employees and invitees with the parking
provisions contained herein. Tenant hereby authorizes Landlord, at Tenants sole expense, to tow away from the
Project and store until redeemed by its owner any vehicle belonging to Tenant or Tenants employees parked in
violation of these provisions. 4.6
SIGNS:Tenant shall not place or install on or within any portion
of the Leased Premises, the Building, the
Common Areas or the Project any sign (other than a business
identification sign first approved by Landlord in accordance with this Article), advertisements, banners, placards or
pictures which are visible from the exterior of the Leased Premises. Tenant shall not place or install on or within
any portion of the Leased Premises, the Building, the Common Areas or
the Project any business identification sign
which is visible from the exterior of the Leased Premises until Landlord shall have first approved in writing the
location, size, content, design, method of attachment and material to be used in the making of such sign. Any signs,
once approved by Landlord, shall be installed only in strict compliance with Landlords approval, at Tenants expense,
using a person first approved by Landlord to install same. Landlord may remove any signs (not first approved in writing
by Landlord), advertisements, banners, placards or pictures so placed by Tenant on or within the Leased Premises,
the Building, the Common Areas or the Project and charge to Tenant the cost of such removal, together with any
costs incurred by Landlord to repair any damage caused thereby, including any cost incurred to restore the
surface upon which such sign was so affixed to its original condition. Tenant shall remove any such signs, repair any damage
caused thereby, and restore the surface upon which the sign was affixed to its original condition, all to Landlords
reasonable satisfaction, upon the termination of this Lease.
Notwithstanding the foregoing, however, Tenant shall be
allowed to place its identification signs and logos in the areas which were previously used by Syquest Technologies,
Inc. on the same buildings and upon the same monuments. 4.7 LANDLORDS RIGHT TO ENTER:Landlord and its agents shall have
the right to enter the Leased Premises during normal business hours upon at least twenty four
(24) hours prior notice (except in the event of an emergency) and subject to Tenants reasonable security measures
for the purpose of (i) inspecting the same; (ii) supplying
any services to be provided by Landlord to Tenants; (iii)
showing the Leased Premises to prospective purchasers, mortgagees or
tenants; (iv) making necessary
alterations, additions or repairs; (v) performing any of Tenants obligations when Tenant has failed to do so after giving
Tenant reasonable written notice of its intent to do so; and
(vi) posting notices of non-responsibility or For
Lease or For Sale signs. Additionally, Landlord
shall have the right to enter the Leased Premises without notice to
Tenant at times of emergency. Notwithstanding the pregoing, Landlord shall not show the Leased Premises to tenants or
post For Lease signs except during the last six (6) months or the Lease Term (including extensions thereof). 4.8
CONTROL OF COMMON AREAS:Landlord shall at all times have the
administrative control of the -4-




---



##### 



Common Areas including
without limitation, the right to prohibit mobile food and beverage or
other vendors from
entering the Property. 4.9 RULES AND REGULATIONS:Landlord shall have the right from time to time to establish reasonable
rules and regulations regarding the use of the Common Areas. Upon delivery to Tenant of a copy of such reasonable
rules and regulations. Tenant shall comply with such rules and regulations. 4.10 OUTSIDE AREAS:No materials, pallets, supplies, tanks or containers whether above or below ground
level, equipment, finished products or semi-finished products,
raw materials, inoperable vehicles or articles of any nature shall be stored upon or permitted to remain outside or the
Leased Premises except in fully fenced and screened areas outside the Building which have been designed for such
purpose and have been approved in writing by Landlord
for such use by Tenant. 4.11 HAZARDOUS MATERIALS:Landlord and Tenant agree that with
respect to the existence or use of
Hazardous Materials (as defined as such under current laws or
regulations as may be amended from to time) on the
Property, any handling, transportation, storage, treatment,
disposal or use of Hazardous Materials (other than the use
of ordinary office and janitorial products), in any amount, by
Tenant, Tenants agents, or any other party associated
with Tenant must be absolutely and completely disclosed to and
approved in writing by Landlord prior to its arrival
in the Premises. Landlord may uncontestably withhold Landlords
approval at Landlords sole discretion. Any
withholding from Landlord of information relating to Hazardous
Materials used or stored by Tenant shall constitute a
material default under the terms of the Lease and shall be cause
for lease termination at Landlords option. Any use
or storage of any disclosed Hazardous Materials in or about the
Property, which use or storage shall have been
approved by Landlord, shall strictly comply with all applicable
Hazardous Materials laws. Tenant shall, upon request
by Landlord, provide proof of approvals by the governing
authorities. Landlords consent or approval once given
shall not constitute approval for any subsequent bringing of
Hazardous Materials onto the Premises or Project.
Tenant shall indemnify, defend upon demand with counsel
reasonably acceptable to Landlord, and hold harmless
Landlord from and against any and all liabilities, losses,
claims, damages, lost profits, consequential damages,
interest, penalties, fines, court costs, remediation costs,
investigation costs, and other expenses which result from or
arise in any manner whatsoever out of the use, storage,
treatment, transportation, release, or disposal of Hazardous
Materials on or about the Leased Premises or the Property by
Tenant, Tenants agents, permitees, or invitees. If the
presence of Hazardous Materials on the Leased Premises, the
Building, or the Project caused or permitted by Tenant,
Tenants agents, permitees, or invitees result in contamination
or deterioration to any extent of water, soil, or any
part of the Leased Premises, the Building, or the Project, then
Tenant shall promptly take any and all action
necessary to remove said Hazardous Materials and to return the
Project (and any other property of whatever nature) to
their condition existing prior to the appearance of such
Hazardous Materials. Landlord may at any time and at
Tenants sole cost perform any tests or investigations
(including the installation of testing wells) it deems
appropriate to determine the presence of Hazardous Materials on
the Project. The terms of this clause shall survive
the expiration or sooner termination of this Lease. To the best
knowledge of Landlord, (a) no Hazardous Material is
present on the Project or the soil, surface water or groundwater
thereof, (b) no underground storage tanks are present
on the Project, and (c) no action, proceeding or claim is
pending or threatened regarding the Project concerning any
Hazardous Material or pursuant to any environmental law. Under
no circumstance shall Tenant be liable for, and
Landlord shall indemnify, defend, protect and hold harmless
Tenant, its agents, contractors, stockholders, directors,
successors, representatives, and assigns from and against all
losses, costs, claims, liabilities and damages (including
reasonable attorneys and consultants fees) of every type and
nature, directly or indirectly arising out of or in
connection with any Hazardous Material present at any time on or
about the Project, or the soil, air, improvements,
groundwater or surface water thereof, or the violation of any
laws, orders, or regulations, relating to any such
Hazardous Material except to the extent that any of the
foregoing actually results from the release or emission of
Hazardous Material by Tenant or its agents or employees in
violation of applicable environmental laws. ARTICLE 5
REPAIRS, MAINTENANCE, SERVICES AND UTILITIES 5.1 REPAIR AND MAINTENANCE:The parties shall have the following
obligations and responsibilities
with respect to the repair and maintenance of the Leased
Premises, the Building and the Common Areas. A. Tenants Obligation: Tenant shall, at all times during
the Lease Term and at its sole cost and
expense, regularly clean and continuously keep and
maintain in good order, condition and repair the Leased
Premises
and every part thereof and all appurtenances thereto,
including, without limiting the generality of the foregoing.
(i)
all interior walls, floors and ceilings, (ii) all windows,
doors and skylights, (iii) all electrical wiring, conduits,
connectors and fixtures, (iv) all plumbing, pipes, sinks,
toilets, faucets and drains, (v) all lighting fixtures, bulbs
and
lamps, (vi) all heating, ventilating and air conditioning
equipment located within the Leased Premises or located outside the Leased Premises (e.g. rooftop compressors) and
serving the Leased Premises and (vii) all entranceways to
the Leased Premises. Tenant, if requested to do so by
Landlord, shall hire, at Tenants sole cost and expense, a licensed heating, ventilating and air conditioning
contractor to regularly, and periodically inspect (not less
frequently
than every three months) and perform required maintenance
on the heating, ventilating and air conditioning
equipment and systems serving the Leased Premises, or
alternatively, Landlord may, at its election, contract in its
own name for such regular and periodic inspections of and
maintenance on such heating, ventilating and air
conditioning equipment and systems and charge to Tenant,
as Additional Rent, the cost thereof. Tenant shall, at its
sole cost and expense, repair all damage to the Building,
the Common Areas or the Project caused by the activities of
Tenant, its employees, invitees or contractors promptly
following written notice from Landlord to so repair such
damage. If Tenant shall fail to perform the required
maintenance or fail to make repairs required of it pursuant to
this
Article within a reasonable period of time following
notice from Landlord to do so, then Landlord may, at its
election and without waiving any other remedy it may
otherwise have under this Lease or at Law, perform such
maintenance or make such repairs and charge to Tenant, as
Additional Rent, the costs so incurred by Landlord for
same. All glass within or a part of the Leased Premises,
both interior and exterior, is at the sole risk of Tenant and
any broken glass shall promptly be replaced by Tenant at
Tenants expense with glass of the same kind, size and
quality. -5-




---



##### 



B. Landlords Obligation: Landlord shall, during the Lease
Term or any extensions thereof, and at

Landlords sole cost and expense, repair the exterior
structural parts of the Building (including the foundation,
concrete walls, and roof structure) (the Structural
Portions). In addition, Landlord, at Tenants sole cost and
expense, shall be responsible for maintaining in good and
serviceable repair, the roof membrane, the glazing, the
Common Area, the paved areas (including driving surfaces,
curbs and gutters and landscaping. During the time that
Renco Investment Company owns the Project, Landlord shall,
also maintain in good condition and repair: the
exterior finishes including paint, and the electrical and
plumbing systems located outside the Leased Premises which
service the Building, all heating, ventilating and airconditioning equipment located within the Leased Premises or
located outside the Leased Premises (e.g. rooftop
compressors). Landlord shall charge Tenant, as Additional Rent,
the costs incurred by Landlord in making such non-structural
repairs and maintenance. In the event that Landlord
closets to replace the roof membrane or elects to replace the
parking and driveway areas, (as opposed to repairing such
items) such cost shall be paid for by Landlord and the cost of
such replacement(s) shall be amortized at the interest
rate of Ten (10%) Percent per annum over the useful life of
the replacement. The monthly amortized amount shall
become a Building Operating Expense and Tenant shall pay such
amortized portions of such Building Operating
Expense as provided in Section 13.11.G 5.2 SERVICES AND UTILITIES:The parties shall have the
following responsibilities and obligations
with respect to obtaining and paying the cost of providing the
following utilities and other services to the Leased
Premises. A. Gas and Electricity: Tenant shall arrange, at its sole cost and
expense and in its own name, for
the supply of gas and electricity to the Leased Premises. Tenant
shall be responsible for determining if the local
supplier of gas and/or electricity can supply the needs of Tenant and
whether or not the existing gas and/or electrical
distribution systems within the Building and the Leased Premises are
adequate for Tenants needs. Tenant shall pay
all charges for gas and electricity as so supplied to the Leased
Premises. B. Water: Tenant shall arrange, at its sole cost and expense and in
its own name, for the supply of
water to the Leased Premises C. Security Service: Tenant acknowledges that Landlord is not
responsible for the security of the
Leased Premises or the protection of Tenants property or Tenants
employees, invitees or contractors, and that to the
extent Tenant determines that such security or protection services
are advisable or necessary, Tenant shall arrange for
and pay the costs of providing same. D. Trash Disposal: Tenant acknowledges that Landlord is not
responsible for the disposal of
Tenants waste, garbage or trash and that Tenant shall arrange, in
its own name and at its sole cost, for the regular
and periodic removal of such waste, garbage or trash from the Leased
Premises. In no event shall Landlord be required
to provide trash bins for the disposal of Tenants waste, garbage or
trash. 5.3
LIMITATION OF LANDLORDS LIABILITY:Landlord shall not be
liable to Tenant for injury to Tenant, its employees, agents,
invitees or contractors,
damage to Tenants property or loss of Tenants business or
profits, nor shall Tenant be entitled to terminate this Lease
or to any reduction in or abatement of rent by reason of
(i) any failure, interruption, rationing or other curtailment
in the supply of water, electric current, gas or other utility
service to the Leased Premises, the Building or the Project
from whatever cause (other than Landlords active negligence or willful misconduct), or (ii) the unauthorized
intrusion or entry into the Leased Premises by third parties. ARTICLE 6
ALTERATIONS AND IMPROVEMENTS 6.1 BY TENANT:Tenant shall not make any alterations to or
modifications of the Leased Premises or construct any improvements to or within the Leased Premises without
Landlords prior written approval, and then not
until Landlord shall have first approved, in writing, the plans and
specifications therefore, which approval shall nor
be unreasonably withheld. Tenant may, however, make nonstructural
alterations without Landlords consent to the
extent the cost of any particular project is less than twenty-five
thousand dollars($25.000). All such modifications,
alterations or improvements, once so approved, shall be made,
constructed or installed by Tenant at Tenants
expense, using a licensed contractor first approved by Landlord, in
substantial compliance with the Landlord-approved
plans and specifications therefore. All work undertaken by Tenant
shall be done in accordance with all Laws and in a
good and workmanlike manner using new materials of good quality that
match or complement the original
improvements existing as of the Lease Commencement Date. Tenant shall
not commence the making of any such
modifications or alterations or the construction of any such
improvements until (i) all required governmental
approvals and permits shall have been obtained, (ii) all requirements
regarding insurance imposed by this Lease have
been satisfied, (iii) Tenant shall have given Landlord or least five
business days prior written notice of its intention
to commence such work so that Landlord may post and file notices of
non-responsibility, and (iv) if requested by
Landlord, Tenant shall have obtained contingent liability and broad
form builders risk insurance in an amount
satisfactory to Landlord to cover any perils relating to the proposed
work not covered by insurance carried by Tenant
pursuant to Article 9. In no event shall Tenant make any
modifications, alterations or improvements to the Common Areas or any areas outside of the Leased Premises. As used in
this Article, the term modifications, alterations and/or improvements shall include, without limitation, the
installation of additional electrical outlets, overhead
lighting fixtures, drains, sinks, partitions, doorways, or the like.
Tenant shall pay Landlords reasonable costs to
inspect the construction of Tenants alterations or modifications and
to have Landlords architect revise Landlords
drawings to show the work performed by Tenant. Notwithstanding the
above provisions, however, Landlord and
Tenant acknowledge that as a part of the consideration for Tenant and
Landlord having entered into this Lease
Agreement, that Tenant intends to modify the interior of the Leased
Premises. By the terms of Exhibit C hereof,
Landlord agrees to reimburse Tenant for a portion of the expense in
the modification of said interior (the Initial
Tenant Improvements). 6.2
OWNERSHIP OF IMPROVEMENTS:All modifications, alterations or
improvements made or added to the Leased Premises by Tenant (other than Tenants inventory,
equipment, movable furniture, wall decorations and
trade fixtures) shall be deemed real property and a part of the leased
Premises, but shall remain the property of Tenant during the Lease
Term. Any such modifications, alterations or
improvements, once completed, shall not be
altered or removed from the Leased Premises during the Lease Term
without Landlords written approval first obtained in accordance with the provisions of the Article above. At
the expiration or sooner termination of the Lease
all such modifications, alterations and improvements (other than
Tenants inventory, equipment, movable furniture,
wall decorations and trade fixtures) shall automatically become
the property of Landlord and shall be surrendered to -6-




---



##### 



Landlord as a part of the
Leased Premise as required pursuant to Article 2, unless Landlord
shall require Tenant to remove any of such modifications, alterations or
improvements by giving Tenant written notice of such requirement
at the time of consent, in which case Tenant shall so remove
same on or before the expiration of the Lease Term
(including extensions thereof). Landlord shall not require
Tenant to remove any of the Initial Tenant Improvements.
Landlord shall have no obligation to reimburse to Tenant all or
any portion of the cost or value of any such
modifications, alterations or improvements so surrendered to
Landlord. All modifications, alterations or
improvements which are installed or constructed on or attached
to the Leased Premises by Landlord at Landlords
expense shall be deemed real property, and a part of the Leased
Premises and shall be the property of Landlord. All
lighting, plumbing, electrical, heating, ventilating and air
conditioning fixtures, partitioning, window coverings,
wall coverings and floor coverings installed by Tenant shall be
deemed improvements to the Leased Premises and not
trade fixtures of Tenant. 6.3 ALTERATIONS:Throughout the term of this Lease or any
extensions thereof, at its sole cost, Tenant
shall make all modifications, alterations and improvements to
the Leased Premises that are required by any Law for
any reason. Notwithstanding the foregoing. In no event shall
Tenant be required to cause the Structural Portions of
the Buildings (concrete walls, foundations, and the structural
portions of the roof) to comply with Laws unless such
requirement is due solely to Tenants particular use. 6.4
LIENS:Tenant shall keep the Leased Premises, the Building and
the Property free from any liens and shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Leased Premises. ARTICLE 7
ASSIGNMENT AND SUBLETTING BY TENANT 7.1 BY TENANT:Tenant shall not sublet the Leased Premises (or any
portion thereof) or assign or encumber its interest in this Lease, whether voluntarily or by operation of
Law, without Landlords prior written consent first
obtained in accordance with the provisions of this Article 7. Any
attempted subletting, assignment or encumbrance
without Landlords prior written consent, at Landlords election,
shall constitute a default by Tenant under the terms
of this Lease. The acceptance of rent by Landlord from any person or
entity other than Tenant, or the acceptance of
rent by Landlord from Tenant with knowledge of a violation of the
provisions of this Article, shall not be deemed to
be a waiver by Landlord of any provision of this Article or this
Lease or to be a consent to any subletting by Tenant
or any assignment or encumbrance of Tenants interest in this
Lease.
Notwithstanding the forgoing, however,
Landlord hereby gives its consent to sublet the premises commonly
known and referred to as Renco 47 consisting of
approximately 51,767 square feet of space for only the initial
period of 36 months from the Commencement Date,
without Landlords participation in Assignment Consideration and
Excess Rentals and without being subject to any
recapture or termination rights under Section 7.3. Such subletting
shall be to a reasonable subtenant and Landlord
shall have the same rights as described in this Article 7 saving and
excepting therefrom only the provision that
Tenant share with the Landlord, Assignment Consideration and Excess
Rentals. Notwithstanding anything to the
contrary herein, Tenant may, without Landlords prior written
consent, sublet the Leased Premises or assign the
Lease to (a) a subsidiary, affiliate, division or corporation
controlling, controlled by or under common control with
Tenant, (b) a successor corporation related to Tenant by merger,
consolidation, non-bankruptcy reorganization, or
government action, or (c) a purchaser of substantially all of
Tenants assets located in the Premises. A sale or
transfer of Tenants capital stock shall not be deemed an
assignment, subletting or any other transfer of the Lease or
the Leased Premises. 7.2 INTENTIONALLY DELETED 7.3 LANDLORDS ELECTION:If Tenant or Tenants successors shall
desire to assign its interest under this
Lease or to sublet the Leased Premises, Tenant and Tenants
successors must first notify Landlord, in writing, of its
intent to so assign or sublet, at least thirty days in advance
of the date it intends to so assign its interest in this
Lease or sublet the Leased Premises but not sooner than sixty
days in advance of such date, specifying in detail the
terms of such proposed assignment or subletting, including the
name of the proposed assignee or sublessee, the
proposed assignees or Sublessees intended use of the Leased
Premises, a current financial statement of such
proposed assignee or sublessee and the form of documents to be
used in effectuating such assignment or subletting.
Landlord shall have a period of fifteen days following receipt
of such notice and receipt of all information reasonably
requested by Landlord regarding the proposed assignee or
sublessee within which to do one of the following: (a) in
the event of an assignment or sublease of more than fifty (50%)
percent of an entire Building for substantially the
remaining Lease Term, to terminate the Lease as to that part of
the Leased Premises proposed to be so sublet, or
assigned or (b) if Landlord shall not have elected to or does
not have the option to cancel and terminate this Lease, to
either (i) consent to such requested assignment or subletting
subject to Tenants and Tenants successors compliance
with the conditions set forth in Article 7.4 below or (ii)
refuse to so consent to such requested assignment or subletting, provided that such consent shall not be unreasonably
refused. It shall not be unreasonable for Landlord to
withhold its consent to any proposed assignment or subletting
if (i) the proposed assignees or subtenants anticipated
use of the Premises involves the storage, use or disposal of a
Hazardous Material: (ii) if the proposed assignee or
subtenant has been required by any prior landlord, lender or
governmental authority to clean up Hazardous Materials
unlawfully discharged by the proposed assignee or subtenant; or
(iii) if the proposed assignee or subtenant is subject
to investigation or enforcement order or proceeding by any
governmental authority in connection with the use,
disposal or storage of a Hazardous Material. Tenant and
Tenants successors covenant and agree to supply to
Landlord, upon request, with all necessary or relevant
information which Landlord may reasonably request respecting
such proposed assignment or subletting and/or the proposed
assignee or sublessee. Landlords review period shall not
commence until Landlord has received all Information requested
by Landlord. 7.4 CONDITIONS TO LANDLORDS CONSENT:If Landlord elects to
consent, or shall have been
ordered to so consent by a court of competent jurisdiction, to
such requested assignment, subletting or encumbrance,
such consent shall be expressly conditioned upon the
occurrence of each of the conditions below set forth. The
conditions are as follows: -7-




---



##### 



A. Landlord having approved in form and substance the assignment or
sublease agreement (or the
encumbrance agreement), which approval shall not be unreasonably
withheld by Landlord if the requirements of this
Article 7 are otherwise complied with. B. Each such sublessee or assignee having agreed, in writing
satisfactory to Landlord and its counsel and for the benefit of Landlord, to assume, to be bound
by, and
to perform the obligations of this Lease to be performed by Tenant
(or, in the case of an encumbrance, each such
encumbrance having similarly agreed to assume, be
bound by and to perform Tenants obligations upon a foreclosure or
transfer in lieu thereof). C. Tenant being in full compliance, having cured any defaults under
the terms of this Lease
through and including the date of the requested consent, as well as
through and including the date such assignment or
subletting is to become effective. D. Tenant having reimbursed to Landlord all reasonable costs and
attorneys fees incurred by
Landlord in conjunction with the processing and documentation of any
such requested subletting, assignment or encumbrance. E. Tenant having delivered to Landlord a complete and fully executed
duplicate original of such
sublease agreement, assignment agreement or encumbrance (as
applicable) and all related agreements. F. Tenant having paid, or having agreed in writing to pay as to
future payments, in Landlord fifty
percent of all assignment consideration or excess rentals to be paid
to Tenant or to any other on Tenants behalf or
for Tenants benefit for such assignment or subletting as follows: (1) If Tenant assigns its interest under the Lease and if all or a
portion of the consideration for such
assignment is to be paid by the assignee at the time of the
assignment, that Tenant shall have paid to Landlord and
Landlord shall have received an amount equal to fifty percent of the
assignment consideration so paid or to be paid
whichever is the greater) at the time of the assignment by the
assignee after subtracting Tenants reasonable costs in
connection therewith (including, without limitation reasonable
brokerage commissions and attorneys fees and the
unamortized portion of Tenant Improvements paid for solely by Tenant
(Assignment/Subletting Costs), all reduced
to a monthly amount to be allocated over the remaining term of the
Lease; or (2) If Tenant assigns its interest under this Lease and if Tenant is
to receive all or a portion of the
consideration for such assignment in future installments, that Tenant
and Tenants assignee shall have entered into a
written agreement with and for the benefit of Landlord satisfactory
to Landlord and its counsel whereby Tenant and
Tenants assignee jointly agree to pay to Landlord an amount equal
fifty percent of all such future assignment
consideration installments to be paid by such assignee as and when
such assignment consideration is so paid after
subtracting Tenants Assignment/Subletting Costs. (3) If Tenant Subleases the Leased Premises, that Tenant and Tenants
sublessee shall have entered
into a written agreement with and for the benefit of Landlord
satisfactory to Landlord and its counsel whereby Tenant
and Tenants sublessee jointly agree to pay to Landlord fifty percent
of all excess rentals to be paid by such sublessee
as and when such excess rentals are so paid after subtracting
Tenants Assignment/Subletting Costs. 7.5 ASSIGNMENT CONSIDERATION AND EXCESS RENTALS DEFINED:For
purposes of
this article, the term Assignment Consideration shall mean
all consideration to be paid by the Assignee as
consideration for such assignment, and the term Excess
Rentals shall mean all consideration to be paid by the
Sublessee in excess of the rent to be paid by said
Sublessee/Sublessor for the premises subleased for the same period.
It is specifically intended and agreed that this provision is
intended to be a fifty percent profit sharing clause, such
that Tenant and Landlord shall share and share alike in any
profit (after reasonable costs of subletting or assignment)
as a result of any transfer of an interest in the Lease or the
Leased Premises or any other property, as more
particularly described herein. In the event Tenant or Tenants
successors sublease a portion of the Leased Premises,
Excess Rentals shall be calculated by subtracting the rent
payable by the Sublessor for the portion of the Leased
Premises so sublet from all consideration to be paid by such
Sublessee. Rent payable by the Sublessor for the
portion of the Leased Premises so sublet shall be calculated
by multiplying the Base Monthly Rent payable by the
Sublessor for the Leased Premises leased by such Sublessor by
a fraction, the numerator of which is the area in
square feet subleased and the denominator of which is the
total floor area of the Leased Premises leased by such
Sublessor also in square feet. Tenant and Tenants Successors
agree that fifty percent of any Assignment
Consideration and/or Excess Rentals hereunder after
subtracting Tenants Assignment/Subletting Costs shall be the
property of Landlord and fifty percent of such shall be the
property of Tenant. 7.6
PAYMENTS:All payments required by this Article to be made to
Landlord shall be made in cash in full as
and when they become due. At the time
Tenant, Tenants assignee or sublessee makes each such payment to
Landlord, Tenant or Tenants assignee or sublessee, as the case
may be, shall deliver to Landlord an itemized statement in reasonable detail showing the method by which the amount due Landlord was calculated and certified by the
party making such payment as true and correct. Landlord may require that all payments of Excess Rentals and/or
Assignment Consideration to be made hereunder be made directly to Landlord by such Transferee. 7.7 GOOD FAITH:The rights granted to Tenant by this Article are granted in consideration of Tenants express
covenant that all pertinent allocations which are made by Tenant
between the rental value of the Leased Premises and
the value of any of Tenants personal property which may be conveyed
or leased concurrently with and which may
reasonably be considered a part of the same transaction as the
permitted assignment or subletting shall be made
fairly, honestly and in good faith. If Tenant shall breach this
Covenant of Good faith. Landlord may immediately
declare Tenant to be in default under the terms of this Lease and
terminate this Lease and/or exercise any other rights
and remedies Landlord would have under the terms of this Lease in the
case of a material default by Tenant under this
Lease. 7.8 EFFECT OF LANDLORDS CONSENT:No subletting, assignment or
encumbrance, even with the
consent of Landlord, shall relieve Tenant of its personal and
primary obligation to pay rent and to perform all of the
obligations to be performed by Tenant hereunder. Consent by
Landlord to one or more assignments or encumbrances
of Tenants interest in this Lease or to one or more
sublettings of the Leased Premises shall not be deemed to be a
consent to any subsequent assignment, encumbrance or
subletting. If Landlord shall have been entered by a court of
competent jurisdiction to consent to a requested assignment or
subletting, or such an assignment or subletting shall
have been ordered over the objection or Landlord, such assignment or subletting shall not be binding between the
assignee (or sublessee) and Landlord until such time as all
conditions set forth in Article 7.4 above have been fully
satisfied (to the extent not then satisfied) by the assignee or
sublessee, including, without limitation, the payment to
Landlord of all agreed assignment considerations and/or excess
rentals then due Landlord. -8-




---



##### 



ARTICLE 8
LIMITATION ON LANDLORDS LIABILITY AND INDEMNITY 8.1
LIMITATION ON LANDLORDS LIABILITY AND RELEASE:Except to the
extent of the active negligence or willful misconduct of Landlord or its agents
or contractor or a breach of Landlords obligations
under the Lease, Landlord shall not be liable to Tenant for and
Tenant hereby releases Landlord and its partners and
officers from, any and all liability, whether in contract, tort or
on any other basis, for any injury to or any damage
sustained by Tenant, its agents, employees, contractors or
invitees; any damage to Tenants property; or any loss to
Tenants business, loss of Tenants profits or other financial loss
of Tenant resulting from or attributable to the
condition of, the management of, the maintenance of or the
protection of the Leased Premises or the failure of any
component of the Premises, the Building, the Project or the Common
Areas, including, without limitation, any
such injury, damage or loss resulting from (i) the failure,
interruption, rationing or other curtailment or cessation in
the supply of electricity, water, gas or other utility service to
the Project, the Building or the Leased Premises; (ii)
the vandalism or forcible entry into the Building or the Leased
Premises; (iii) the penetration of water into or onto
any portion of the Leased Premises through roof leaks or otherwise;
(iv) the failure to provide security and/or
adequate lighting in or about the Project, the Building or the
Leased Premises; (v) the existence of any design or
construction defeats within the Project, the Building or the Leased
Premises; (vi) the failure of any mechanical
systems to function properly (such as the HVAC systems); or (vii)
the blockage of access to any portion of the
Project, the Building or the Leased Premises. 8.2 TENANTS INDEMNIFICATION OF LANDLORD:Except to the extent
of the active negligence
or willful misconduct of Landlord or its agents or contractors
or a breach of Landlords obligations under the Lease,
Tenant shall defend Landlord, with competent counsel
reasonably satisfactory to Landlord, against any claims made
or legal actions filed or threatened by third parties against
Landlord which result from the death, bodily injury,
personal injury, damage to property or interference with
contractual or other rights suffered by any third party,
(including other Tenants within the Project) which (i)
occurred within the Leased Premises or the Common Areas or
(ii) resulted from Tenants use or occupancy of the Leased
Premises or the Common Areas or (iii) resulted from
Tenants activities in or about the Leased Premises, the
Building or the Project, and Tenant shall indemnify and hold
Landlord, Landlords principals, employees and agents harmless
from any loss (including loss of rents by reason of
vacant space which otherwise would have been leased but for
such activities), liabilities, penalties, or expense
whatsoever (including all legal fees incurred by Landlord
with respect to defending such claims) resulting therefrom.
The terms of his indemnity agreement pertain to events which
shall have occurred during the term of this Lease but
the indemnity shall survive the expiration or sooner
termination of this Lease. ARTICLE 9
INSURANCE 9.1 TENANTS INSURANCE:Tenant shall maintain insurance complying with
all of the following: A. Tenant shall procure, pay for and keep in full force and effect,
at all times during the Lease
Term, the following: (1) Commercial General Liability insurance insuring Tenant against
liability for bodily injury,
death, property damage and personal injury occurring at the Leased
Premises, or resulting from Tenants use or
occupancy of the Leased Premises or the Building, Outside Areas,
Property, or Common Areas or resulting from
Tenants activities in or about the Leased Premises. Such insurance
shall be on an occurrence basis with a combined
single limit of liability of not less than the amount of Tenants
Required Liability Coverage (as set forth in Article
I). The policy or policies shall be endorsed to name Landlord and
such others as are designated by Landlord as
additional insureds and shall contain the following additional
endorsement: The insurance afforded to the additional
insureds is primary insurance. If the additional insureds have other
insurance which is applicable to the loss on a
contributing, excess or contingent basis, the amount of this
insurance companys liability under this policy shall not
be reduced by the existence of such other insurance. Any insurance
carried by the additional insureds shall be excess
and non contributing with the insurance provided by the Tenant. The
policy shall not be canceled or reduced without
at least 30 days written notice to additional insureds. If the
policy insures more than one location, it shall be endorsed to show that the limits and aggregate apply per location.
Tenants policy shall also contain the severability of
interest and cross-liability endorsement or clauses. (2) Fire
and property damage insurance in so-called Special Form
insuring Tenant against loss
from physical damage to Tenants personal property, inventory,
stock, trade fixtures and improvements within the
Leased Premises with coverage for the full actual replacement cost
thereof; (3) Plate-glass
insurance, at actual replacement cost;

          (4) Product Liability insurance shall not be required by
Landlord. (5) Workers compensation insurance and any other employee benefit
insurance sufficient to comply with all Laws which policy shall be endorsed to provide thirty
(30) days written notice of cancellation to
Landlord. (6) Comprehensive Auto Liability insurance with a combined single
limit coverage of not less
than the amount of Tenants Required Liability Coverage (as set
forth in Article 1.1 M. Each policy of liability
insurance required to be carried by Tenant pursuant to this Article
or actually carried by Tenant with respect to the
Leased Premises or the Property (i) shall be in a form satisfactory
to Landlord, (ii) Shall be provided by carriers
admitted to do business in the state of California, with a Best
rating of A/VI or better and/or acceptable to
Landlord. Property insurance shall contain a waiver and/or a
permission to waive by the insurer any right of
subrogation against Landlord, its principals, employees, agents and
contractors which might arise by reason of any
payment under such policy or by reason of any act or omission of
Landlord, its principals, employees, agents or
contractors. (7) Business Interruption Insurance which shall adequately
compensate Tenant for any losses
incurred due to Tenants inability to use the Premises whether
caused by the act or failure to act by Landlord or any
other reason Tenant shall have been denied the full and normal use
of the Premises or any portion thereof. C. Prior to the time Tenant or any of its contractors enters
the Leased Premises, Tenant shall deliver to the
Landlord with respect to each policy of insurance required to
be carried by Tenant pursuant to this Article, a
certificate of the insurer certifying, in a form reasonably
satisfactory to the Landlord, that the policy has been issued
and premium paid providing the coverage required by this
Article and containing the provisions herein. Attached to -9-




---



##### 



such a certificate shall be endorsements naming Landlord as
additional insured, and including the wording under
primary insurance above. Landlord may at any lime and from
time-to-time inspect and/or copy any and all insurance
policies required to be carried by Tenant pursuant to this
article. D. The Commercial General Liability insurance carried by Tenant
shall specifically insure the performance
by Tenant of the Indemnification provisions set forth in Article
8.2 of this lease provided, however, nothing contained in this Article 9 shall be construed to limit the
liability of Tenant under the Indemnification provisions set
forth in said Article 8.2. E. Notwithstanding anything contained herein to the contrary, all
insurance policies and coverages required
under the terms of this Lease shall require a minimum notice to
Landlord of Thirty (30) days prior to a cancellation,
of such coverages or providers. F.In the event that Tenant shall not have acquired all of
the insurance coverages and policies as required
above, by the Lease Commencement Date, Landlord shall have
the right but not the obligation to acquire such
coverages and policies on behalf of Tenant at Tenants
sole cost and expense, and Tenant shall, upon demand by
Landlord, reimburse to Landlord, all costs associated with
the premiums, acquisition, and administration of such
coverages and policies, and such costs shall be a Building
Operating Expense. 9.2 LANDLORDS INSURANCE:With respect to insurance maintained by
Landlord: A. Landlord shall maintain, as the minimum coverage required of
it by this Lease, property insurance
insuring Landlord (and such others as Landlord may designate)
against loss from physical damage to the Building
with coverage of not less than one hundred percent of the full
actual replacement cost thereof and against loss of rents
for a period of not less than twelve months. Such property damage
insurance, at Landlords election but without any
requirement on Landlords behalf to do so, (i) may be written in
so-called Special Form, excluding only those perils
commonly excluded from such coverage by Landlords then property
damage insurer; (ii) may provide coverage for
physical damage to the improvements so insured for up to the
entire full actual replacement cost thereof; (iii) may be
endorsed to include (or separate policies which may be carried to
cover) loss or damage caused by any additional perils
against which Landlord may elect to insure, including earthquake
and/or flood; (iv) may provide coverage for loss of
rents for a period of up to twelve months; and/or (v) may contain
deductibles per occurrence in an amount reasonably acceptable to Landlord. Landlord shall not be required to
cause such insurance to cover any of Tenants personal
property, inventory and trade fixtures, or any modifications,
alterations or improvements made or constructed by
Tenant to or within the Leased Premises. B. Landlord shall maintain Commercial General Liability insurance
insuring Landlord (and such others as
are designated by Landlord) against liability for personal
injury, bodily injury, death, and damage to property
occurring in, on or about, or resulting from the use or occupancy
of the Project, or any portion thereof, with
combined single limit coverage of at least Two Million Dollars.
Landlord may carry such greater coverage as
Landlord or Landlords Lender, insurance broker or advisor or
counsel may from time to time determine is reasonably
necessary for the adequate protection of Landlord and the
Project. C. Landlord may maintain any other insurance which in the opinion
of its lender, insurance broker or advisor, or legal counsel is reasonably prudent to carry under the
given circumstances. 9.3
MUTUAL WAIVER OF SUBROGATION:Notwithstanding
anything to the contrary in the Lease,
Landlord hereby releases Tenant, and Tenant hereby
releases Landlord and its respective partners and officers,
agents,
employees and servants, from any and all liability for
loss, damage or injury to the property of the other in or
about
the Leased Premises which is caused by or results from a
peril or event or happening which would be covered by
insurance required to be carried under the terms of this
Lease, or is covered by insurance actually carried and in
force
at the time of the loss, by the party sustaining such
loss. ARTICLE 10
DAMAGE TO LEASED PREMISES 10.1 LANDLORDS DUTY TO RESTORE:If the Leased Premises are
damaged by any peril after the Effective Date of this Lease, Landlord
shall restore the Leased
Premises, as and when required by this Article, unless
this Lease is terminated by Landlord pursuant to Article 10.2 or
by Tenant pursuant to Article 10.3. All insurance
proceeds available from the fire and property damage insurance
carried by Landlord shall be paid to and become the
property of Landlord. If this Lease is terminated pursuant to
either Article 10.2 or 10.3. all insurance proceeds
available from insurance carried by Tenant which cover loss to
property that is Landlords property or would become
Landlords property on termination of this Lease shall be paid to
and become the property of Landlord (except to the
extent such property was installed at Tenants sole cost) and the
remainder of such proceeds shall be paid to and
become the property of Tenant. If this Lease is not terminated
pursuant to either Article 10.2 or 10.3, all insurance
proceeds available from insurance carried by Tenant which cover
loss to property that is Landlords property shall be
paid to and become the property of Landlord, and all proceeds
available which cover loss to property which would
become the property of Landlord upon the termination of this
Lease shall be paid to and remain the property of
Tenant provided that Tenant agrees to restore such property. If
this Lease is not so terminated, then upon receipt of
the insurance proceeds (if the loss is covered by insurance) and
the issuance of all necessary governmental permits,
Landlord shall commence and diligently prosecute to completion
the restoration of the Leased Premises, to the extent
then allowed by Law, to substantially the same condition in which
the Leased Premises existed as of the time just
prior to such damage or destruction. Landlords obligation to
restore shall be limited to the Leased Premises and
interior improvements constructed by Landlord. Landlord shall
have no obligation to restore any other improvements
to the Leased Premises or any of Tenants personal property,
inventory or trade fixtures. Upon completion of the
restoration by Landlord, Tenant shall forthwith replace or fully
repair all of Tenants personal property, inventory,
trade fixtures and other improvements constructed by Tenant to
like or similar condition as existed at the time of
such damage or destruction. 10.2 LANDLORDS RIGHT TO TERMINATE:Landlord shall have the
option to terminate this Lease in
the event any of the following occurs, which option may be
exercised only by delivery to Tenant of a written notice
of election to terminate within thirty days after the date of
such damage or destruction: A. The Building is damaged by any peril covered by valid
and collectible insurance actually carried by Landlord and in force at the time of such damage or
destruction (an insured peril) to such an extent that the
estimated cost to restore the Building exceeds the lesser
of (i) the insurance proceeds (including deductibles)
available -10-




---



##### 



from insurance actually carried by Landlord, or (ii) seventy-five
percent of the then actual estimated replacement cost
thereof; B. The Building is damaged by an uninsured peril. D. The Building is damaged by any peril and, because of the
Laws then in force, the Building (i)
can not be restored at reasonable cost or (ii) if restored,
can not be used for the same use being made thereof before
such damage. Notwithstanding the foregoing, in the event of
either A or B above, Tenant may but is not required to
elect to contribute the shortfall of proceeds within thirty
(30) days of Landlords written notice of such shortfall, in
which event Landlord shall restore the Leased Promises and
shall not have the right to terminate the Lease. In no
event shall Landlord have the right to terminate the Lease if
the damage to the Leased Premises is relatively minor
(e.g. repair or restoration which would cost less than ten
(10%) percent of the replacement cost of the Leased
Premises. 10.3 TENANTS RIGHT TO TERMINATE:If the Leased Premises are
damaged by any peril and Landlord
does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to this Article, then as soon
as reasonably practicable, Landlord shall furnish Tenant with
the written opinion of Landlords architect or construction consultant as to when the restoration work required of
Landlord may be complete. Tenant shall have the option
to terminate this Lease in the event any of the following
occurs, which option may be exercised in the case of A or
B below only by delivery to Landlord of a written notice of
election to terminate within seven days after Tenant receives from Landlord the estimate of the time needed to
complete such restoration: A. The Leased Premises are damaged by any peril and,  in the
reasonable opinion of Landlords architect or construction consultant, the restoration of the Leased
Premises cannot be substantially completed within
nine (9) months after the date of such notice from Landlord; or B. The Leased Premises are damaged by any peril within nine months
of the last day of the Lease
Term and, in the reasonable opinion of Landlords architect or
construction consultant, the restoration of the Leased
Premises cannot be substantially completed within ninety days after
the date such restoration is commenced. 10.4 TENANTS WAIVER:Landlord and Tenant agree that the provisions
of Article 10.3 above, captioned
 Tenants Right to Terminate, are intended to supersede and replace
the provisions contained in California Civil
Code, Section 1932, Subdivision 2, and California Civil Code, Section
1934, and accordingly, Tenant hereby waives
the provisions of said Civil Code Sections and the provisions of any
successor Code Sections or similar Laws hereinafter enacted. 10.5 ABATEMENT OF RENT:In the event of damage to the Leased Premises
which does not result in the
termination of this Lease, the Base Monthly Rent (and any Additional
Rent) shall be temporarily abated during the
period of restoration in proportion to the degree to which Tenants
use of the Leased Premises is impaired by such
damage. ARTICLE 11
CONDEMNATION 11.1 RIGHT TO TERMINATE:Subject to Article 11.3, Tenant and
Landlord each shall have the option to
terminate this Lease if, as a result of a taking by means of
the exercise of the power of eminent domain, a portion
greater than thirty three (33%) percent of the Leased Premises
are so taken. 11.2 INTENTIONALLY LEFT BLANK 11.3 TEMPORARY TAKING:If any portion of the Leased Premises is
temporarily taken for one year or
less, this Lease shall remain in effect. If more than 33% of the
Leased Premises is temporarily taken for a period
which either exceeds one year or which extends beyond the natural
expiration of the Lease Term, then Landlord and
Tenant shall each independently have the option to terminate this
Lease, effective on the date possession is taken by
the condemnor. 11.4 RESTORATION AND ABATEMENT OF RENT:If any part of the Leased Premises is taken by
condemnation and this Lease is not terminated, then Landlord shall
repair any damage occasioned thereby to the remainder of the Leased Premises to a condition reasonably suitable for
Tenants continued operations, to the extent
practicable. As of the date possession is taken by the condemning
authority, (i) the Base Monthly Rent shall be
reduced in the same proportion that the area of that part of the
Leased Premises so taken bears to the area of the
Leased Premises immediately prior in such taking, and (ii) Tenants
Proportionate Share shall be appropriately
adjusted. 11.5 DIVISION OF CONDEMNATION AWARD:Any award made for any
condemnation of the Project,
the Building, the Common Areas or the Leased Premises, or any portion
thereof, shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right,
title and interest in any such award. Tenant shall,
however, be entitled to make a claim for a separate award for
Tenants fixtures and equipment, moving expenses, loss
of goodwill and the unamortized portion of improvements paid for by
Tenant. ARTICLE 12
DEFAULT AND REMEDIES 12.1 EVENTS OF TENANTS DEFAULT:The occurrence of any of the
following shall constitute a
default by Tenant: (a) failure to pay rent or other charges
when due where such failure is not cured within five days
after written notice of nonpayment; (b) failure to perform
any other provision of this Lease within the time periods
provided where such failure is not cured within thirty (30)
days after written notice of such failure or such longer
period as is reasonably necessary to effect such cure. 12.2. LANDLORDS REMEDIES:Landlord shall have the following
remedies (which are cumulative and not
exclusive and are in addition to any remedies now or later
allowed by law) if Tenant is in default beyond applicable
notice and cure periods. Landlord may terminate Tenants
right to possession of the Premises at any time. No act
by Landlord other than giving notice to Tenant shall
terminate this Lease. Acts of maintenance, efforts to relet the
Premises, or the appointment of a receiver on Landlords
initiative to protect Landlords interest under the terms of -11-




---



##### 



this Lease shall not constitute a termination of Tenants right to
possession. Upon termination of Tenants right to
possession, Landlord has the right to recover from Tenant: (1) the
worth of the unpaid rent that had been earned at the
time of termination of Tenants right to possession; (2) the worth
of the amount of the unpaid rent that would have
been earned after the date of termination of Tenants right to
possession after subtracting the amount Tenant
reasonably proves could reasonably be avoided by Landlord; (3) any
other amount, including but not limited to
expenses incurred to relet the premises, court, attorney and
collection costs, necessary to compensate Landlord for
any all losses caused by Tenants default. The worth, as used in
this article, is to be computed by allowing interest
at the maximum legal interest rate permitted by law. 12.3 LANDLORDS DEFAULT AND TENANTS REMEDIES:In the event Landlord
fails to perform
any of its obligations under this Lease. Landlord shall nevertheless
not be in default under the terms of this Lease until such time as Tenant shall have first given Landlord written
notice specifying the nature of such failure to perform
its obligations, and then only after Landlord shall have had a
reasonable period of time following its receipt of such
notice within which to perform such obligations. In the event of
Landlords default as above set forth, then, and only
then, Tenant may then proceed at law to compel Landlord to perform
its obligations and/or to recover damages
proximately caused by such failure to perform. In the event Landlord
fails to perform any of its obligations herein or
under the Lease within such reasonable time period (except in case of
emergency posing an immediate threat to
persons or property, in which case no prior notice shall be
required), then Tenant shall have the right but not the
obligation to cure such default and to demand reimbursement by
Landlord for the reasonable cost of such cure
with interest thereon at the rate of ten (10%) percent per annum or
the highest rate allowed by law, whichever is less,
from the date of the expenditure until repaid. Nothing in this
Article 12.3 shall entitle Tenant to offset rent or deduct
such amounts from the Base Monthly Rent or Additional Rent due under
the terms of this Lease. 12.4
LIMITATION ON TENANTS RECOURSE:Tenant agrees that the
obligations of Landlord under
this Lease shall not constitute personal obligations of the officers,
directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals of any business
entity which holds title to the Project. Tenant
shall have recourse only to the assets of the Project (as shown on
the Site Plan) for the satisfaction of such
obligations and not to the other assets of any individual owner such
officers, directors, trustees, partners, joint
venturers, members, owners, stockholders or principals. Additionally,
if Landlord is a corporation, partnership or
limited liability corporation, then Tenant covenants and agrees: A. No partner, stockholder, or officer of Landlord shall be sued or
named as a party in any suit or
action brought by Tenant with respect to any alleged breach of this
Lease (except to the extent necessary to secure
jurisdiction over the entity and then only for that sole purpose); B. No service of process shall be made against any partner,
stockholder, or officer of Landlord
except for the sole purpose of securing jurisdiction over the entity;
and C. No writ of execution shall be levied against the assets of any
partner or officer of Landlord other
than to the extent of his interest in the assets of the Project.
Tenant further agrees that each of the foregoing
covenants and agreements shall be enforceable by Landlord and by any
partner or officer of Landlord and shall be
applicable to any actual or alleged misrepresentation or
non-disclosure made respecting this Lease or the Leased
Premises or any actual or alleged failure, default or breach of my
covenant or agreement either expressly or
implicitly contained in this Lease or imposed by statute or at common
law. 12.5 TENANTS WAIVER:Landlord and Tenant agree that the provisions
of Article 12.3 above are intended
to supersede and replace the provisions of California Civil Code
1932(1), 1941 and 1942, and accordingly, Tenant
hereby waives the provisions of Section 1932(1), 1941 and 1942 of the
California Civil Code and/or any similar or
successor Law regarding Tenants right to terminate this Lease or to
make repairs and deduct the expenses of such
repairs from the rent due under this Lease. Tenant hereby waives any
right of redemption or relief from forfeiture
under the Laws of the State of California, or under any other present
or future Law, in the event Tenant is evicted or
Landlord takes possession of the Leased Premises by reason of any
default by Tenant. ARTICLE 13
GENERAL PROVISIONS 13.1 TAXES ON TENANTS PROPERTY:Tenant shall pay before delinquency
any and all taxes, assessments, license fees, use fees, permit fees and public charges of
whatever nature or description levied, assessed or imposed against Tenant or Landlord by a governmental agency arising out
of, caused by reason of or based upon
Tenants estate in this Lease. Tenants ownership of property,
improvements made by Tenant to the Leased Premises,
improvements made by Landlord for Tenants use within the Leased
Premises, Tenants use (or estimated use) of public facilities or services or Tenants consumption (or estimated
consumption) of public utilities, energy, water or
other resources. On demand by Landlord. Tenant shall furnish Landlord
with satisfactory evidence of these payments.
If any such taxes, assessments, fees or public charges are levied
against Landlord, Landlords property, the Building
or the Project, or if the assessed value of the Building or the
Project is increased by the inclusion therein of a value
placed upon same, then Landlord, after giving written notice to
Tenant, shall have the right, regardless of the validity
thereof, to pay such taxes, assessment, fee or public charge and bill
Tenant, as Additional Rent, the amount of such
taxes, assessment, fee or public charge so paid on Tenants behalf.
Tenant shall, within ten days from the date it receives an invoice from Landlord setting forth the amount of such
taxes, assessment, fee or public charge so levied,
pay to Landlord, as Additional Rent, the amount set forth in said
invoice. Failure, by Tenant to pay the amount so
invoiced within said ten day period shall be conclusively deemed a
default by Tenant under this Lease. Tenant shall
have the right, and with Landlords full cooperation if Tenant is not
then in default under the terms of this Lease, to
bring suit in any court of competent jurisdiction to recover from the
taxing authority the amount of any such taxes,
assessment, fee or public charge so paid. 13.2 HOLDING OVER:This Lease shall terminate without further notice
on the Lease Expiration Date (as set
forth in Article 1) as the same may be extended pursuant to the terms
of the Lease. Any holding over after the
expiration of the Lease shall be deemed an unlawful detainer of the
Leased Premises unless Landlord has consented to
same in writing. Any holding over by Tenant with written permission
of Landlord shall be construed to be a tenancy
from month to month, on the same terms and conditions herein
specified insofar as applicable, except that the Base
Monthly Rent shall be increased to an amount equal to one hundred
fifty percent of the Box Monthly Rent payable
during the last full month immediately preceding such period of
holding over. -12-




---



##### 



13.3 SUBORDINATION TO MORTGAGES:This Lease is subject and
subordinate to all underlying
ground leases and to all mortgages and deeds of trust which affect
the Building and are of public record as of the Effective Date of this Lease, and to all renewals, modifications,
consolidations, replacements and extensions thereof.
However, if the lessor under any such ground lease or any Lender
holding any such mortgage or deed of trust shall
advise Landlord that it desires or requires this Lease to be made
prior and superior thereto, then, upon written request
of Landlord to Tenant. Tenant shall promptly execute, acknowledge
and deliver any and all documents or instruments
which Landlord and such lessor or Lender deem necessary or desirable
to make this Lease prior thereto. Tenant hereby
consents to Landlords ground leasing the land underlying the
Building and/or encumbering the Building as security
for future loans on such terms as Landlord shall desire, all of
which future ground leases, mortgages or deeds of trust
shall be subject and subordinate to this Lease. However, if any
lessor under any such future ground lease or any
Lender holding such future mortgage or deed of trust shall desire or
require that this Lease be made subject and subordinate to such future ground lease, mortgage or deed of trust, then
Tenant agrees, within twenty (20) days after
Landlords written request therefore, to execute, acknowledge and
deliver to Landlord any and all documents or as requested by Landlord or such lessor or Lender as may be necessary or
proper to assure the subordination of this Lease
to such future ground lease, mortgage or deed of trust; but only if
such lessor or Lender agrees to recognize Tenants
rights under this Lease and not to disturb Tenants quiet possession
of the Leased Premises so long as Tenant is not
in default under this Lease. Tenants failure to execute and deliver
such subordination agreement within twenty (20)
days after Landlords request therefore (after the passage of an
additional five (5) day cure period after written notice to
Tenant of such failure) shall be a material default by Tenant under
this Lease, and Landlord shall have all of the
rights and remedies available to Landlord as Landlord would
otherwise have in the case of any other material default
by Tenant, including the right to terminate this Lease and sue for
damages proximately caused thereby, it being
agreed and understood by Tenant that Tenants failure to so deliver
such subordination agreement in a timely manner
could result in Landlord being unable to perform committed
obligations to other third parties which were made by
Landlord in reliance upon this covenant of Tenant. Landlord and
Tenant intend that any statement delivered pursuant
to this Article may be relied upon by any Lender or purchaser or
prospective Lender or purchaser of the Building, the
Project, or any interest therein. Landlord shall, within ninety (90)
days of written request by Tenant following full
execution of this Lease, use its best efforts to cause all mortgages,
lenders, and other parties currently holding a
security interest affecting the Leased Premises to execute a
recognition and non-disturbance agreement which (i)
provides that this Lease shall not be terminated so long as Tenant is not in default under this Lease and (ii)
recognizes all of Tenants rights hereunder. 13.4 TENANTS ATTORNMENT UPON FORECLOSURE:Tenant shall, upon request, attorn (i) to
any purchaser of the Building at any foreclosure sale or private
sale conducted pursuant to any security instrument encumbering the Building, (ii) to any grantee or transferee designated
in any deed given in lieu of foreclosure of any
security interest encumbering the Building, or (iii) to the lessor
under any underlying ground lease of the land underlying the Building, should such ground lease be terminated; provided
that such purchaser, grantee or lessor recognizes
Tenants rights under this Lease. 13.5
MORTGAGEE PROTECTION:In the event of any default on the part of Landlord, Tenant will give
notice by registered mail to any Lender or lessor under any
underlying ground lease who shall have requested, in writing, to Tenant that it be provided with such notice, and Tenant shall offer such Lender or lessor a reasonable opportunity to cure the default, including time to obtain possession of the Leased Premises by power of sale or judicial
foreclosure or other appropriate legal proceedings if reasonably necessary to effect a cure. 13.6 ESTOPPEL CERTIFICATES:Tenant will, following any request(s) by Landlord, promptly execute
and deliver to Landlord an estoppel certificate (i) certifying that
this Lease is unmodified and in full force and effect,
or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force
and effect, (ii) stating the date to which the rent and other
charges are paid in advance, if any, (iii) acknowledging that
there are not, to Tenants knowledge, any uncured defaults on the
part of Landlord hereunder, or specifying such
defaults if any are claimed, and (iv) certifying such other
information about this Lease as may be reasonably requested
by Landlord. Tenants failure to execute and deliver such estoppel
certificate within ten days after Landlords request
therefore (after the passage of an additional five (5) day cure
period after written notice to Tenant of such failure) shall
be a material default by Tenant under this Lease, and Landlord shall
have all of the rights and remedies available to
Landlord as Landlord would otherwise have in the case of any other
material default by Tenant, including the right to
terminate this Lease and sue for damages proximately caused thereby,
it being agreed and understood by Tenant that
Tenants failure to so deliver such estoppel certificate in a
timely manner could result in Landlord being unable to
perform committed obligations to other third parties which were made by Landlord in reliance upon this covenant of
Tenant. Landlord and Tenant intend that any statement delivered pursuant to this Article may be relied upon by any
Lender or purchaser or prospective Lender or purchaser of the
Building, the Project, or any interest therein. 13.7 TENANTS FINANCIAL INFORMATION:Tenant shall, within ten business days after Landlords
request therefore, deliver to Landlord a copy of Tenants most
recent, publicly disclosed, audited financial statement
certified by Tenant in writing as to its accuracy) including a
publicly disclosed income statement and balance sheet. 13.8 FORCE MAJEURE:The obligations of each of the parties under this
Lease (other than the obligation to
pay money) shall be temporarily excused if such party is prevented or
delayed in performing such obligation by reason of any strikes, lockouts or labor disputes; inability to obtain
labor, materials, fuels or reasonable substitutes
therefore; governmental restrictions, regulations, controls, action
or inaction; civil commotion; inclement weather,
fire or other acts of God; or other causes (except financial
inability) beyond the reasonable control of the party obligated to
perform (including acts or omissions of the other party for a period
equal to the period of any such prevention, delay or stoppage. 13.9 NOTICES:Any notice required or desired to be given by a party regarding this Lease shall be in writing
and shall be personally served, or in lieu of personal service may be
given by depositing such notice in the United
States mail, postage prepaid, addressed to the other party at the
address specified in Article 1.1 above. Any notice
required under the Lease that is sent by mail shall be deemed
received if properly addressed, three (3) business days
after any such notice is deposited in the United States mail
certified,
postage prepaid, return-receipt requested. -13-




---



##### 



13.10
ATTORNEYS FEES:In the event any party shall bring any
action, arbitration proceeding or legal proceeding alleging a breach
of any provision of this Lease to
recover rent, to terminate this Lease, or to enforce,
protect, determine or establish any term or covenant of this
Lease or rights or duties hereunder of either party, the
prevailing party shall be entitled to recover from the
non-prevailing party as a part of such action or proceeding, or in
a separate action for that purpose brought within one year from
the determination of such proceeding, all reasonable
expenses incurred by the prevailing party. In the event that
Landlord shall be required to retain counsel to enforce any
provision of this Lease, or if Tenant defaults under this Lease
and thereafter cures (or desires to cure) such default
with Landlords consent, Tenant shall pay to Landlord all
reasonable expenses so incurred by Landlord promptly upon
demand. Landlord may enforce this provision by requiring Tenant
to pay such fees and costs as a condition to curing
its default. 13.11 DEFINITIONS:Any term that is given a special meaning by
any provision in this Lease shall, unless
otherwise specifically stated, have such meaning whenever used
in this Lease or in any Addenda or amendment
hereto. In addition to the terms defined in Article 1, the
following terms shall have the following meanings: A. REAL PROPERTY TAXES:The term Real Property Tax or Real
Property Taxes
shall each mean (i) all taxes, assessments, levies and other
charges of any kind or nature whatsoever, general and special (including all installments of principal and interest
required to pay any general or special assessments for public
improvements and any increases resulting from reassessments
caused by any change in ownership or new
construction), now or hereafter imposed by any governmental or
quasi-governmental authority or special district
having the direct or indirect power to tax or levy assessments,
which are levied or assessed for whatever reason
against the Project or any portion thereof, or Landlords
interest therein, or the fixtures, equipment and other property
of Landlord that is an integral part of the Project and located
thereon, or Landlords business of owning, leasing or
managing the Project or the gross receipts, income or rentals
from the Project; (ii) all charges, levies or fees imposed
by any governmental authority against Landlord by reason of or
based upon the use of or number of parking spaces
within the Project, the amount of public services or public
utilities used or consumed (e.g. water, gas, electricity,
sewage or surface water disposal) at the Project, the number of
persons employed by tenants of the Project, the size
(whether measured in area, volume or number of tenants) or the
value of the Project, or the type of use or uses
conducted within the Project; and (iii) all costs and fees
(including reasonable attorneys fees) incurred by Landlord in
contesting any Real Property Tax and in negotiating with public
authorities as to any Real Property Tax. If, at any
time during the Lease Term, the taxation or assessment of the
Project prevailing as of the Effective Date of this
Lease shall be altered so that in lieu of or in addition to any
Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method
of taxation or assessment creation of a new tax or
charge, or any other cause) an alternate, substitute, or
additional tax or charge (i) on the value, size, use or occupancy
of the Project or Landlords interest therein or (ii) on or
measured by the gross receipts, income or rentals from the
Project, or on Landlords business of owning, leasing or
managing the Project or (iii) computed in any manner with
respect to the operation of the Project, then any such tax or
charge, however designated, shall be included within the
meaning of the terms Real Property Taxes for purposes of this
Lease. If any Real Property Tax is partly based
upon property or rents unrelated to the Project, then only that
part of such Real Property Tax that is fairly allocable
to the Project shall be included within the meaning of the terms
Real Property Taxes, Notwithstanding the
foregoing, the term Real Property Taxes shall not include
estate, inheritance, transfer, gift or franchise taxes of
Landlord or the federal or state income tax imposed on
Landlords income from all sources. Real Property Taxes
shall not include and Tenant shall not be required to pay any
portion of any tax or assessment expense or any increase
therein in excess of the amount which would be payable if such
tax or assessment expense were paid in installments
over the longest term allowed by the assessing or taxing
authority. B. LANDLORDS INSURANCE COSTS:The term Landlords Insurance
Costs shall
mean the costs to Landlord to carry and maintain the policies of
fire and property damage insurance, including
earthquake and flood, for the Project and Landlords general
liability insurance carried by Landlord pursuant to Article
9, together with any deductible amounts paid by Landlord upon
the occurrence of any insured casualty or loss. C. PROJECT MAINTENANCE COSTS:The term Project Maintenance
Cost shall
mean all costs and expenses (except Landlords Insurance Costs
and Real Property Taxes) paid or incurred by Landlord
in protecting, operating, maintaining, repairing and preserving
the Project and all part thereof, including without
limitation, (i) professional management fees equal to three
percent of the annualized Base Monthly Rent, (ii) the
amortizing portion of any costs incurred by Landlord in the
making of any modifications, alterations or improvements which are so amortized during the Lease Term, (iii)
costs of complying with ADA standards imposed
upon Landlord, governmental regulations governing Tenants use
of Hazardous Materials, and Landlords costs of
monitoring Tenants use of Hazardous Materials including fees
charged by Landlords consultants to periodically
inspect the Premises and the Property, all costs associated with
the maintaining and repairing of the parts of the
drainage district, and (v) such other costs as may be paid or
incurred with respect to operating, maintaining and
preserving the Project, such as repairing replacing and
resurfacing the exterior surfaces of the buildings (including
roof membranes but not the structural portions of the roof),
repairing, replacing portions of and resurfacing paved
areas, cleaning, maintaining, repairing, or replacing the
interior of the Leased Premises both during the Lease Term
and upon the termination of the Lease, and maintaining,
repairing or replacing , when necessary electrical, plumbing,
sewer, drainage, heating, ventilating and air conditioning
systems serving the buildings, providing utilities to the
common areas, maintenance, repair, replacement or installation of
lighting fixtures, directional or other signs and
signals, irrigation or drainage systems, trees, shrubs,
materials, maintenance of all landscaped areas, and any rental
paid far machinery and equipment (if leased). D. READY FOR OCCUPANCY:The term Ready for Occupancy shall mean
the date upon
which all of the Lease documents have been fully executed and
delivered to the respective parties and all monies
required by the terms of the Lease have been paid,
Notwithstanding the Ready For Occupancy provision of this
Lease, and the definition thereof, the Base Monthly Rent and the
Additional Rent shall not commence until June 1, 2000. E. TENANTS PROPORTIONATE SHARE:The term Tenants Proportionate
Share or
Tenants Share, as used with respect to an item pertaining to
the Building, shall each mean one hundred percent of
the square footage of the Leased Premises and of the Project. F. BUILDINGS PROPORTIONATE SHARE:Not applicable in this Single
Tenant Lease wherein Tenant is leasing both buildings. G. BUILDING OPERATING EXPENSES:The term Building Operating
Expenses shall
mean and include all of the of all Real Property Taxes, all
Insurance Costs, including Landlords general liability
costs and any insurance costs relating to Article [9.1 F] herein
contained, all Project Maintenance Costs and an
accounting fee equal to three percent of the combined total of all
such costs. Notwithstanding anything to the -14-




---



##### 



contrary in the Lease, Building Operating Expenses shall not include and
Tenant shall not have any obligation to perform or to pay for the following
(collectively, Costs): (a) Costs occasioned by the act omission or violation
of any law by Landlord; (b) Costs occasioned by casualty or by the exercise of
the power of eminent domain; (c) Costs to correct any construction defect as
certified by a licensed architect with at least 10 years experience in the
design and construction of industrial type concrete tilt-up buildings in Santa
Clara County, in the Leased Premises or the Project on the Lease execution
date; (d) Costs incurred in connection with the presence of any Hazardous
Material in, on, under, or about the Project except, to the extent caused by the
release or emission of the Hazardous Material in question by Tenant, Tenants
agents or Tenants employees; (e) interest, charges and fees incurred on debt;
(f) Costs of repair, maintenance and replacement of the Structural Portions of
the Buildings (concrete walls, foundations, and the structural portions of the
roof) and costs lo cause such structural portions to comply with Laws. H. LAW:
The term Law shall mean any judicial decision and any statute,
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal, or other
governmental agency or authority having jurisdiction over the parties to this
Lease, the Leased Premises, the Building or the Project, or any of them in
effect either at the Effective Date of this Lease or at any time during the
Lease Term, including, without limitation, any regulation, order, or policy of
any quasi-official entity or body (e.g. a board of Fire examiners or a public
utility or special district). I. LENDER:
The term Lender shall mean the holder of any note or other
evidence of indebtedness secured by the Project or any portion
thereof. J. PRIVATE
RESTRICTIONS: The term Private Restrictions shall mean all
recorded covenants, conditions and restrictions, private agreements, easements,
and any other recorded instruments affecting the use of the Project, as they
may exist from time to time. K. RENT: The term rent shall mean collectively Base Monthly Rent and all
Additional Rent, and all other amounts owed by Tenant to Landlord. L. COMMON
AREAS: Those areas surrounding the enclosed Leased Premises upon
which exists landscaping areas, parking areas, driveway and access areas, trash
enclosures, sidewalks, and so forth which areas compose a portion of The
Project. 13.12
GENERAL WAIVERS: One partys consent to or approval of any act by the
other party, requiring the
first partys consent or approval shall not be deemed to waive or render
unnecessary the first partys consent to or approval of any subsequent similar
act by the other party. No waiver of any provision hereof shall be effective
unless
in writing and signed by the waiving party. The receipt by Landlord of any rent
or payment with or without
knowledge of the breach of any provision hereof shall not be deemed a waiver of
any such breach. No waiver of any
provision of this Lease shall be deemed a continuing waiver unless such waiver
specifically states so in writing and
is signed by both Landlord and Tenant. No delay or omission in the exercise of
any right or remedy accruing to either
party upon any breach by the other party under this Lease shall impair such
right or remedy or be construed as a
waiver of any such breach theretofore or thereafter occurring. The waiver by
either party of any breach of any
provision of this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other
provisions herein contained. 13.13
MISCELLANEOUS: Should any provision of this Lease prove to be
invalid or illegal, such invalidity
or illegality shall in no way affect, impair or invalidate any other
provision hereof, and such remaining provisions
shall remain in full force and effect. Time is of the essence with
respect to the performance of every provision of this
Lease in which time of performance is a factor. Any copy of this Lease
which is executed by the parties shall be
deemed an original for all purposes. This Lease shall, subject to the
provisions regarding assignment, apply to and
bind the respective heirs, successors, executors, administrators
and assigns of Landlord and Tenant. The term party
shall mean Landlord or Tenant as the context implies. If Tenant
consists of more than one person or entity, then all
members of Tenant shall be jointly and severally liable hereunder. This
Lease shall be construed and enforced in
accordance with the Laws of the State of California. The language in
all parts of this Lease shall in all cases be construed as a whole
according to its fair meaning, and not strictly for or against either
Landlord or Tenant. The
captions used in this Lease are for convenience only and shall not be
considered in the construction or interpretation
of any provision hereof. When the context of this Lease requires, the
neuter gender includes the masculine, the
feminine, a partnership or corporation or joint venture, and the
singular includes the plural. The terms must,
shall, will and agree are mandatory. The term may is
permissive. When a party is required to do something
by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless
specific provision is made therefore. Where Tenant is obligated not to
perform any act or is not permitted to perform
any act. Tenant is also obligated to restrain any others reasonably
within its control, including agents, invitees,
contractors, subcontractors and employees, from performing said act.
Landlord shall not become or be deemed a partner of a joint venturer
with Tenant by reason of any of the provisions of this Lease. 13.14
REASONABLE EXPENSES: Any expenditure by a party permitted or required
under the Lease, for
which such party is entitled to demand and does demand reimbursement from the
other party, shall be limited to the
fair market value of the goods and services involved, shall be reasonably
incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours. 13.15
APPROVALS: Whenever the Lease requires an approval, consent,
designation, determination, selection
or judgement by either Landlord or Tenant, such approval, consent, designation,
determination, selection or
judgement and any conditions imposed thereby shall be reasonable and shall not
be unreasonably withheld or delayed and, in exercising any right or
remedy hereunder, each party shall at all times act reasonably and
in good faith. ARTICLE
14CORPORATE AUTHORITY 14.1
CORPORATE AUTHORITY: If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that Tenant is
validly formed and duly authorized and existing, that Tenant is qualified to do
business in the State of California, that Tenant has the full right and legal
authority to enter into this Lease, that he or she is duly authorized to
execute and deliver this Lease on behalf of Tenant in accordance with the
bylaws and/or a board of directors resolution of Tenant, and that this
Lease is binding upon Tenant in accordance with its terms. -15-




---



##### 



14.2
ENTIRE AGREEMENT: This
Lease, the Exhibits (as described in Article I) and
the Addenda (as described in Article I), which Exhibits and Addenda are by this
reference incorporated herein, constitute the entire agreement between the
parties, and there are no other agreements, understandings or representations
between the parties relating to the lease by Landlord of the Leased Premises
to Tenant, except as expressed herein. No subsequent changes, modifications or
additions to this Lease shall be binding upon the parties unless in writing and
signed by both Landlord and Tenant. 14.3
LANDLORDS REPRESENTATIONS: Tenant acknowledges that neither Landlord nor
any of its agents made any representations or warranties respecting the
Project, the Building or the Leased Premises, upon which Tenant relied in
entering into this Lease, which are not expressly set forth in this Lease.
Tenant further acknowledges that neither Landlord nor any of its agents made
any representations as to (i) whether the Leased Premises may be used for
Tenants intended use under existing Law or (ii) the suitability of the Leased
Premises for the conduct of Tenants business or (iii) the exact square footage
of the Leased Premises, that Tenant relied solely upon its own investigations
respecting said matters and that upon its execution of this Lease, accepts the
leasable area as specified herein. Tenant expressly waives any and all claims
for damage by reason of any statement, representation, warranty, promise or
other agreement of Landlord or Landlords agent(s), if any, not contained in
this Lease or in any Addenda hereto. IN
WITNESS WHEREOF, Landlord
and Tenant have executed this Lease as of the
respective dates below set forth with the intent to be legally bound thereby as
of the Effective Date of this Lease. AS LANDLORD:
    
    AS TENANT:RENCO INVESTMENT COMPANY
    
    VA LINUX SYSTEMS, INCORPORATEDBY:
    
    /s/ [ILLEGIBLE]
    
    BY:
    
    /s/ [ILLEGIBLE][ILLEGIBLE]
    
    
    Brian Biles, VP MktgBY:
    
    /s/ [ILLEGIBLE]
    
    TITLE:
    
    /s/ [ILLEGIBLE]James R. Blair, General Partner
    
    
    Todd Schull, CFOBY:
    
    /s/ Donald [ILLEGIBLE]Richard Peery, General PartnerTITLE:
    
    Richard PeeryDATE:
    
    5/2/00
    
    DATE: 5/2/00
 -16-




---



##### 



EXHIBIT A Bayside Technology Park 46393-47071 Bayside Parkway [site plan omitted]




---



##### 



EXHIBIT B [site plans omitted]




---



##### 



EXHIBIT C
TENANT IMPROVEMENT ALLOWANCE LETTER
INTERIOR ALLOWANCE I. Landlord agrees that it will provide tenant improvement money for the
improvement of the interior of the Leased Premises as follows: Subject to Landlords reasonable approval Tenant shall have the flexibility to
design a floor plan that suits Tenants needs so long as Tenants plan
preserves the general purpose nature of the building and the interior. The term general purpose improvements is intended to mean those improvements
(and the configuration of such improvements) that can be used by a
majority of
users who have or are likely to locate in electronic manufacturing or support
type industrial or office buildings or for mandated upgrades due to ADA
requirements. Special purpose improvements include but are not limited to the
following: raised computer floors, compressed air systems, gas or liquid
distribution systems, haylon fire extinguishing systems, excess or redundant HVAC
equipment or distribution systems, flammable or solvent storage or waste
systems, special electrical systems, lighting levels in excess of Title 24
limitations, redundant or backup electrical power, telephone systems, alarm
systems, public address systems, fire sprinkler monitoring equipment, computer
cabling, burn in rooms, sound insulated rooms, plumbing other than for domestic
use, clean rooms, window covering, moveable partitions, equipment used in
eating or food handling facilities, materials (or the arrangement of materials)
that are unique to one segment of users, the connection of Tenants equipment
to building HVAC, electric, or plumbing systems (fit up), and the like.
Subject to Landlords approval, Tenant at its sole cost and expense shall
install all required improvements and fixtures to provide for any Hazardous
Materials which have been approved in writing by Landlord. Landlord reimburse Tenant for the cost of general purpose Tenant Improvements
up to a maximum of Nine Hundred Seventy Five Thousand, Two Hundred Dollars
($975,200.00). Tenant agrees to pay in cash the entire cost of construction (if
any) of Tenant Improvements in excess of the above amount. Tenant shall provide to Landlord a Conceptual Plan (Conceptual Plan) for the
Tenant Improvements showing Tenants preference for the location of: doors,
partitions, ceilings, air conditioned areas, restrooms, offices, conference
areas, entries, assembly or manufacturing areas, storage and distribution
areas, and any proposed alterations to existing improvements in Landlords
Building. Landlord shall be allowed 3 business days to approve or make
suggestions as to changes in the Conceptual Plan. Landlords approval shall not
be unreasonably withheld. Tenant shall pay the costs of such special purpose
improvements at Tenants sole costs and expense. Tenant shall also be solely responsible for the design, approval, and payment
of the costs of construction for any and all work, fixtures, or materials
required for the construction of Tenants interior improvements as shown on
Construction Drawings approved by Landlord and Tenant. Landlord shall reimburse
Tenant for construction costs as specified above, with the exceptions noted,
upon the following terms and conditions:  1)
    
    Provide Landlord with a Conceptual Plan as noted above and as
approved by Landlord.2)
    
    Complete construction by December 31, 20003)
    
    Comply with the provisions of Article 6 of the Lease




---



##### 



Tenant Improvement Agreement
Interior Allowance
Page 2  4)
    
    Use materials and construction techniques (where appropriate) which
match, complement, or exceed the quality of those used by Landlord in the
construction of the existing improvements5)
    
    Provide Landlord with reproducible drawings showing the construction
performed by Tenant The funds that Landlord has agreed to spend specifically exclude any and all
fees charged by governmental agencies for Tenants use of Hazardous Materials
(approved in writing by Landlord) or Tenants service of food which fees
include but are not limited to: sewer or sanitary district fees, health
department fees, air quality fees, excess water usage fees, and the like. Any
and all such fees shall be paid by Tenant to the appropriate governmental
agency. Upon being presented with evidence reasonably satisfactory to Landlord that all
the construction bills have been paid and that the dates for any liens have
expired or lien rights waived by materialmen, suppliers, contractors and
subcontractors, Landlord shall reimburse Tenant for Tenants construction costs
as provided above.




---



##### 



OPTION TO RENEW LEASE This Option to Renew Lease (Option) is entered into by, and between RENCO
INVESTMENT COMPANY, a California General Partnership (Landlord) and VA LINUX
SYSTEMS, INCORPORATED, A Delaware Corporation (Tenant) to be effective as of
the date the last of the designated signatories to this Option shall have
executed this Option, with respect to the following described Lease (the
Lease) for the following described premises (the Leased Premises): That certain Lease dated as of April 6, 2000, by and between Landlord and
Tenant for the lease of approximately 139,311 square feet in those certain
buildings consisting of 87,544 and 51,767 square feet, more or less, located at
46939 and 47071 Bayside Parkway, Fremont, CA 94538. 1. For and in consideration of Tenant entering into the Lease and other
valuable consideration, Landlord hereby grants to Tenant an option to renew the
Lease for an additional term of Five (5) years (the Renewal Term) commencing
on the expiration of the Lease (the Renewal Commencement Date) and ending
Five) years thereafter (Renewal Expiration Date). 2. The lease of the Leased Premises For the Renewal Term shall be on the same
terms and conditions as set forth in the Lease, except: A. That the rental for the Leased Premises during the Renewal
Term shall be as set forth below in Paragraph 5, and B. That the Security Deposit shall be increased to the rental
amount determined in Paragraph 5 (the Increased Security Deposit
Amount) plus the sum of Five Hundred ($500) Dollars. C. Exhibit C shall be inoperative in that there shall be no Tenant
Improvement Allowance for the modification of the interior of the Leased
Premises for the option period. 3. Provided that Tenant shall not have been in default under the Lease
prior to the exercise of this Option as defaults are defined in Section 4
below, Tenant shall notify Landlord of Tenants exercise of its right to
renew the Lease for Renewal Term only by giving to Landlord written
notice not sooner than seven (7) months prior to the Renewal Commencement Date and not later than five (5) months prior to the
Renewal Commencement Date (time is expressly of the essence to
Landlord). Any attempted exercise of this Option made other than within
the time period stated or in the manner stated shall be void and of no
force or effect. 4. This Option to Renew Lease is expressly conditioned upon Tenant
having performed each and every of its covenants under the Lease at
all times during the entire Lease Term in a timely fashion (time being made
expressly of the essence), with the full and complete understanding that
if, at any time during the Lease Term, Tenant shall fail to perform any of
its covenants or obligations under the Lease in a timely fashion, this
Option shall terminate without notice and be of no further
effect irrespective of whether or not Tenant shall have cured such
breach,




---



##### 



Tenant acknowledges that Tenants promise to faithfully perform each of its
covenants and obligations under the Lease in a timely fashion was material
Inducement to Landlord in granting to Tenant this Option to Renew Lease. For purposes of this Option to Renew Lease Tenant shall be deemed to have paid
the Base Monthly Rent according to the terms of the Lease if Tenant shall have
paid such monthly rental within six (6) days of being notified by Landlord of
such rental being due and unpaid. With respect to matters other than monies due Landlord, Tenant shall be deemed
to have performed according to the terms and conditions of the Lease if Tenant
shall have commenced a cure within ten (10) days of having been notified of a
default under such Lease and shall have completed such cure within thirty (30)
days thereafter or, in the event such a default is not curable within said 30
day period, Tenant shall have diligently pursued such cure to the reasonable
satisfaction of Landlord. 5. If Tenant shall have properly and timely exercised its right to
extend the term of the Lease and provided that Tenant shall not have been
in default under the terms of the Lease as of the Renewal Commencement
Date, the term of the Lease shall be so extended for such Renewal Term on
the same terms and conditions contained in the Lease; provided, however,
there shall be no Tenant Improvement Allowance Letter and the Base
Monthly Rent for each month of the first Twelve (12) months Renewal
Term shall be calculated as follows: The new Base Monthly Rent of the
Renewal Term shall be the greater of: (i) the Base Monthly Rent being paid
by Tenant to Landlord during the final full month of the initial Lease
Term, or (ii) the Then Market Rental Rate for the Lease Premises. 6. For purposes of this Option to Renew Lease, the term Then Monthly
Market Rental Rate shall be determined by mutual agreement between
Landlord and Tenant or, in the event such agreement cannot be made within
ten (10) days from the date Tenant shall have exercised this Option,
Landlord and Tenant shall each appoint a real estate appraiser with at
least five (5) years full-time commercial/Industrial appraisal experience
in Santa Clara County to appraise and determine the fair market monthly
rental rate the Leased Premises, in their then existing condition for the
use specified in the Lease could be leased for, on the same terms and
conditions set forth in the Lease, to a qualified tenant ready, willing and
able to lease the Leased Premises for a term equal to the Renewal Term.
Notwithstanding the above, however, the appraisers shall take into
consideration the value of the Tenant in place, and the avoided costs of
retaining an existing Tenant in His/Her efforts to determine a fair and
representative Then Monthly Market Rental Rate. If either party does not
appoint an appraiser within ten (10) days after the other party has given
notice of the name of its appraiser, the other party can then apply to the
President of the Santa Clara County Real Estate Board or the presiding
Judge of the Superior Court of that County for the selection of a second
appraiser who meets the qualifications stated above. The failing party
shall bear the cost of appointing the second appraiser and of paying the
second appraisers fee. The two appraisers shall attempt to establish the
Then Monthly Market Rental Rate for the Leased Premises. If the two
appraisers are unable to agree on the Then Monthly Market Rental Rate for
the Leased Premises within ten (10) days after the second appraiser has
been selected or appointed, then the two appraisers shall attempt to
select a third appraiser meeting the qualifications stated above. If they
fail to agree on a third appraiser, either party can follow the
above procedure for having an appraiser appointed by the Real Estate Board or a
judiciary. Each of the parties shall bear one-half (1/2) of the cost
of appointing the third appraiser and of paying the third appraisers
fee. Unless the three appraisers are able to agree on the Then Monthly Market
Rental Rate for the Leased Premises within ten (10) days after
the selection or appointment of the third appraiser, the two
appraisal amounts being calculated most closely together, after having
discarded the appraisal amount which most greatly varies from the
other two appraisal amounts, shall be added together then divided by two (2).
The resulting rental amount shall be defined as the Then Monthly Market Rental
Rate for the Leased Premises. In no event, however, shall the resulting Then
Monthly Market Rental Rate be less than the Base Monthly Rent paid during the
final full month of the Initial Lease Term. If the Then Monthly Market
Rental is determined by appraisal and if Tenant does not, in Tenants
sole discretion, approve the rental amount established thereby, then Tenant
may rescind its exercise of the renewal option by giving Landlord written
notice of such election to rescind within ten (10) days after the Then
Monthly Rental has been established. If Tenant rescinds its exercise of the
renewal option, then (i) the Lease shall terminate on the date the Lease
Term would otherwise have expired absent Tenants exercise of the renewal
option, or at Landlords option, may be extended by ninety (90) days, and (ii)
Tenant shall pay all costs and expenses of all appraisals. The Base Monthly Rent shall be adjusted upward (increased) at the anniversary
of each year of the extended lease term commencing with the beginning of the
Thirteenth Month of the extended lease term, by the amount of Three Percent of
the Base Monthly Rent calculated for the prior Twelve Month period. Such
increased rental amount shall be effective during the subsequent Twelve (12)
month period of the extended term. 7. This Option to Renew is subject and subordinate to any underlying ground
leases and to all mortgages and deeds of trust which affect the Building and
are of public record as of the Effective Date of this Option to Renew Lease,
and to all renewals, modifications, consolidations, replacements and extensions
thereof. However, if the lessor under any such ground lease or any Lender
holding any such mortgage or deed of trust shall advise Landlord that it
desires or requires this Option to Renew Lease to be made prior and superior
thereto, then, upon written request of Landlord to Tenant, Tenant shall
promptly execute, acknowledge and deliver any and all documents or instruments
which Landlord and such lessor or Lender deem necessary or desirable to make
this Option to Renew Lease prior thereto. Tenant hereby consents to Landlords
ground leasing the land underlying the Building and/or encumbering the Building
as security for future loans on such terms as Landlord shall desire, all of
which future ground leases, mortgages or deeds of trust shall be subject and
subordinate to this Option to Renew Lease. However, if any lessor under any
such future ground lease or any Lender holding such future mortgage or deed of
trust shall desire or require that this Option to Renew Lease by made subject
and subordinate to such future ground lease,
mortgage or deed of trust, then Tenant agrees, within twenty (20) days after
Landlords written request therefore, to execute, acknowledge and deliver to
Landlord any and all documents or instruments requested by Landlord or such
lessor or Lender as may be necessary or proper to assure the subordination of
this Option to Renew Lease to such future ground




---



##### 



lease, mortgage or deed of trust; but only if such lessor or Lender agrees to
recognize Tenants rights under this Option to Renew Lease so long as Tenant is
not in default under the Lease, or this Option to Renew Lease. IN WITNESS WHEREOF, the parties have executed this Option to Renew Lease on the
dates below set forth to be effective as of the date referenced above. AS LANDLORD:
    
    
    AS TENANT:RENCO INVESTMENT COMPANY
    
    
    VA LINUX SYSTEMS, INCORPORATEDA California General Partnership
    
    
    A Delaware CorporationBy /s/ [ILLEGIBLE]
    
    
    By
    /s/ BRIAN BILESGeneral Partner
    
    
    Title:
    BRIAN BILES VP MKTG.By /s/ [ILLEGIBLE]
    
    
    By
    /s/ Todd SchullGeneral Partner
    
    
    Title:
    Chief Financial OfficerBy /s/ RICHARD PEERYGeneral PartnerDATE: 5/2/00
    
    
    DATE:
    5/2/00




---



##### 



BAYSIDE TECHNOLOGY PARK
EXTERIOR, SIGNAGE STANDARDS In an effort to encourage and maintain High Quality Architectural Signage
Standards and to also provide for good Tenant visibility, this Exterior Sign
Program has been adopted. BUILDING MOUNTED SIGNAGE MULTI-TENANT BUILDINGS Exterior Wall signs are not permitted unless the building is designed to
accommodate signage in the design of the elevations. At this time
there are no
Multi-Tenant buildings with this design feature. SINGLE TENANT BUILDINGS Custom Logos, Type styles and Colors can be recommended for approval if the
following criteria is observed. Scale Plans showing the dimensioned sizes, square footage used, placement,
colors, materials and finishes must be submitted to RENCO PROPERTIES, INC. for
approval by the review board prior to acquiring City Sign Permits. The overall look of the building elevation must be considered when selecting
size, colors, materials and finishes. Since there are many creative building
designs, what may look good on one building may not necessarily be appropriate
on another. Buildings can be allowed One Sign Location facing each different street
frontage. Bayside Technology Park is not a Retail environment, and only High Quality
Corporate Images are desired. However, your Custom Image is welcome as long as
it can be adapted to the building exterior as a Identification Mark and NOT a
BIG SIGN. Sign design, fabrication and installation should look clean and
contemporary, with attempts made to hide bolts, rivets and other fasteners. The content of the Wall Sign is limited to the Corporate or Company Name, Logo,
Trademark, and/or Division Name. No description of Products or Services,
Slogans, Phone Numbers, Banners, or any other type of sign is permitted.
Shipping & Receiving Hours Signs located on the back of the
building are
exempt.




---



##### 



Bayside Technology Park
Exterior Signage Standards
Page 2 Illuminated Individual
Channel Letters are permitted. The letters can have
transparent faces which illuminate or solid opaque faces which create a halo
effect back illuminated against the building wall. Electrical raceways should
be hidden whenever possible. Exposed Neon is not desired in signage. However,
it could be used if incorporated with the building architectural design such as
in as restaurant exterior. The following Square Footage GUIDELINES will help your designer. Define the
area by using eight or fewer perimeter lines and figure the Square Footage
Area. VERY SHORT NAMES (5 Letters & Logo) can use 40 Square Feet. SHORT NAMES (10
Letters & Logo) can use 50 Square Feet. MEDIUM NAMES (15 Letters & Logo) can
use 60 Square Feet. LONG NAMES (20 Letters & Logo) can use 70 Square Feet. These guidelines are for signs on building walls that face into Bayside
Technology Park. Signs that directly face Freeway 880 may be up to 35% larger than these
guidelines, with a maximum of 75 Square Feet. INFORMATIONAL & DIRECTIONAL SIGNAGE MULTI-TENANT BUILDINGS Informational signs are not permitted unless the building is designed to
accommodate this kind of signage in the design of the site plans. At this time
there are no Multi-Tenant buildings with this design feature. If a
Shipping/Receiving sign is necessary at a driveway entrance, it will be a sign
that is in keeping with the building design, with address numbers and arrows as
needed, but not a listing of tenants names. Informational Signs By the
Street (15' setback is still required) Maximum panel
size is 18" tall x 32" wide, (which is 4 square feet), with the overall height
42" maximum. The signs should be made from painted aluminum and not, plywood,
as it not as durable. SINGLE TENANT
BUILDINGSApril 16, 1996




---



##### 



Bayside Technology Park
Exterior Signage Standards
Page 3 Informational signs are permitted at the building driveways. The signs will be
in keeping with the building design, with address numbers and arrows as needed,
and can include the Corporate Name & Logo, and be in the corporate colors. Informational Signs By the
Street (15' setback is still required) Maximum panel
size is 18" tall x 32" wide, (which is 4 sq. feet), with the
overall height 42"
maximum. Directional Signs within the
parking areas Standard panel size is 18" tall x
32" wide, (which is 4 sq. feet), with the overall height 42". A Multi-Building
Campus with a single tenant may have larger directional signs up to 10 square
feet, like 40" tall x 36~ wide, with the overall height
60~ maximum. These
signs m~ not be located within 50 feet from any street frontage. General Notes on Informational & Directional Signs Informational & Directional Signs are not intended to be advertising signs, so
if there is heavy directional copy, the name and/or logo may have to be left
off, or kept small. Directional signs with changeable or switchable panels can be approved if the
directory is recessed into the main sign face with screws showing. These signs should be fabricated from aluminum and not plywood, as it not as
durable. Acrylic Polyurethane finishes in Semi-gloss finishes will provide 7to
12 years of paint. Informational & Directional Signs can be 2-sided as required. Scale Plans showing the dimensioned sizes, square footage used, placement,
colors, materials and finishes must be submitted to RENCO PROPERTIES, INC. for
approval by the review board prior to acquiring City Sign Permits. After the review board has given written approval, contact Fred Broumand at the
City of Fremont, (415) 790-6642. He is responsible for Exterior Sign Permits.
All exterior signs must be approved by the City of Fremont Planning & Building
Department and have a valid Sign Permit. This can be a 4-5 week approval
process if the sign is visible from Highway 880, Fremont Avenue or West Warren
Avenue. The planning staff may require these major streets locations to go
through their SPAR review process. On smaller streets within the park the
approval process can sometimes take just a few days. The City of Fremont
requires that all electrical signs have a UL label, a permit label and a
manufactures label. April 16, 1996




---



##### 



EXHIBIT B (BAYSIDE TECHNOLOGY PARK MAP)




---



##### 



EXHIBIT B-1 (PRELIMINARY FLOOR PLAN)




---



##### 



EXHIBIT C-1 FURNITURE Phase I Subleased Premises;  
    
    First Floor:  m
    
    Approximately 17 hardwalled offices, 11 conference
rooms, 233 8 x 8 Technlon cubicles, 1 cafeteria, 1 lounge and 6
lab areas that total about 6,000 square feet  
    
    Second Floor.  m
    
    Approximately 23 hardwalled offices, 9
conference rooms and 126 8 x 8 Technlon cublicles  
    
    All existing office furniture, cubicles, conference room furniture
and cafeteria furniture and
other miscellaneous items in the Phase I Subleased Premises,
substantially in accordance
with the Inventory specified in pages 2 and 3 of this Exhibit C-1 Phase II Subleased Premises:  
    
    Approximately 4 hardwalled offices and 1 conference room. -19-




---



##### 



Exhibit C-1 (continued) Inventory - 47071 Bayside Parkway ITEM
    
    QTYCubicles
    
    
    275Telephone Handsets
    
    
    150Cubicle Chairs
    
    
    122Pedestals
    
    
    368OFFICES:Furnished
    
    
    28Chair
    
    
    4Framed White Board
    
    
    1Unframed White Board
    
    
    23Side Chairs
    
    
    35CONFERENCE ROOMS:Conference Tables
    
    
    5Conference Room Chairs
    
    
    82Framed White Board
    
    
    3Unframed White Board
    
    
    15Credenza
    
    
    7LABSRacks
    
    
    2Benches
    
    
    7OTHER:2 Drawer Lateral File Cabinets
    
    
    154 Drawer Lateral File Cabinets
    
    
    62 Drawer Vertical File
    
    
    44 Drawer Vertical File
    
    
    19Desk Unit - Work Alcove
    
    
    2Bookcases
    
    
    13Storage Rack
    
    
    1Laptop center
    
    
    1Extra Wardrobes
    
    
    3Small Wood Stand
    
    
    12 Door Lateral Storage
    
    
    142 Drawer Filer Pedestal
    
    
    1Round Kitchen Table
    
    
    1Kitchen Side Chairs
    
    
    6Regrigerator
- Black
    
    
    1Extra Desk Units
    
    
    3Misc. Style Chairs
    
    
    2Storage Cabinets
    
    
    4Misc. Unframed Whiteboards
    
    
    2Outdoor Fountains
    
    
    2




---



##### 



ITEM
    
    QTYCAFETERIASquare Tables
    
    
    20Round Tables
    
    
    3Tall Tables
    
    
    8Standard Chairs
    
    
    74Tall Chairs
    
    
    24Racks
    
    
    7Equipment:Ice Machine
    
    
    1Sub Zero Refrigerator
    
    
    2Sub Zero Freezer
    
    
    1Steamcraft
    
    
    1Range/Grill/Fryer Combo
    
    
    1Oven
    
    
    2Misc:Garbage Canisters
    
    
    4




---



##### 



EXHIBIT C-2 EQUIPMENT Approximately 150 telephone handsets and CAT 5 cabling. One (1) emergency
backup generator (with transfer switch). Uninterruptible Power Supply
(UPS). Sonitrol Security System Cafeteria:  
    
    Ice Machine
    
    Sub Zero Refrigerator
    
    Sub Zero Freezer
    
    Steamcraft
    
    Range/Grill/Fryer Combo -20-




---



##### 



EXHIBIT D [site blueprint
omitted]




---



##### 



EXHIBIT E (BAYSIDE TECHNOLOGY PARK MAP)